The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to some combination of positive news, upbeat results, or supportive macro developments. As such, investors are taking notice and bidding up shares.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. Keeping that in mind, here is one stock with the fundamentals to back up its performance and two best left ignored.
Two Momentum Stocks to Sell:
Purple (PRPL)
One-Month Return: +18.3%
Founded by two brothers, Purple (NASDAQ:PRPL) creates sleep and home comfort products such as mattresses, pillows, and bedding accessories.
Why Do We Think PRPL Will Underperform?
- Annual revenue declines of 2.9% over the last five years indicate problems with its market positioning
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Purple’s stock price of $0.97 implies a valuation ratio of 11.6x forward EV-to-EBITDA. To fully understand why you should be careful with PRPL, check out our full research report (it’s free).
ANI Pharmaceuticals (ANIP)
One-Month Return: +37.4%
With a diverse portfolio of 116 pharmaceutical products and a growing rare disease platform, ANI Pharmaceuticals (NASDAQ:ANIP) develops, manufactures, and markets branded and generic prescription pharmaceuticals, with a focus on rare disease treatments.
Why Are We Wary of ANIP?
- Modest revenue base of $747.4 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 5.6 percentage points
- Negative returns on capital show management lost money while trying to expand the business
ANI Pharmaceuticals is trading at $91.16 per share, or 14.1x forward P/E. If you’re considering ANIP for your portfolio, see our FREE research report to learn more.
One Momentum Stock to Buy:
CECO Environmental (CECO)
One-Month Return: +44.8%
With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ:CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors.
Why Will CECO Outperform?
- Annual revenue growth of 18.6% over the last two years was superb and indicates its market share increased during this cycle
- Projected revenue growth of 23% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Adjusted operating margin expanded by 11.8 percentage points over the last five years as it scaled and became more efficient
At $46.50 per share, CECO Environmental trades at 36.7x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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