Exciting developments are taking place for the stocks in this article. They’ve all surged ahead of the broader market over the last month as catalysts such as new products and positive media coverage have propelled their returns.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. All that said, here are two stocks with the fundamentals to back up their performance and one best left ignored.
One Momentum Stock to Sell:
Karat Packaging (KRT)
One-Month Return: +19.4%
Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.
Why Are We Hesitant About KRT?
- Earnings per share have contracted by 5.2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
Karat Packaging is trading at $32.83 per share, or 10.5x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than KRT.
Two Momentum Stocks to Watch:
Abercrombie and Fitch (ANF)
One-Month Return: +17.4%
Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE: ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults.
Why Will ANF Beat the Market?
- Comparable store sales rose by 7.3% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Its collection of products is difficult to replicate at scale and leads to a best-in-class gross margin of 62.4%
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 147% exceeded its revenue gains over the last three years
At $88.80 per share, Abercrombie and Fitch trades at 8.3x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Acuity Brands (AYI)
One-Month Return: +19.7%
One of the pioneers of smart lights, Acuity (NYSE: AYI) designs and manufactures light fixtures and building management systems used in various industries.
Why Are We Fans of AYI?
- Solid 9.8% annual revenue growth over the last two years indicates its offerings solve complex business issues
- Offerings are mission-critical for businesses and lead to a best-in-class gross margin of 45.6%
- Free cash flow margin grew by 8.6 percentage points over the last five years, giving the company more chips to play with
Acuity Brands’s stock price of $367.38 implies a valuation ratio of 17.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
