1 Surging Stock to Keep an Eye On and 2 to Turn Down

The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to new product launches, positive news, or even a dedicated social media following.

While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. All that said, here is one stock with the fundamentals to back up its performance and two best left ignored.

Two Momentum Stocks to Sell:

Estée Lauder (EL)

One-Month Return: +22.6%

Named after its founder, who was an entrepreneurial woman from New York with a passion for skincare, Estée Lauder (NYSE:EL) is a one-stop beauty shop with products in skincare, fragrance, makeup, sun protection, and men’s grooming.

Why Do We Steer Clear of EL?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Operating margin declined by 12.1 percentage points over the last year as its sales cratered
3. Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable

Estée Lauder’s stock price of $91.47 implies a valuation ratio of 41.8x forward P/E. If you’re considering EL for your portfolio, see our FREE research report to learn more.

Generac (GNRC)

One-Month Return: +19.9%

With its name deriving from a combination of “generating” and “AC”, Generac (NYSE:GNRC) offers generators and other power products for residential, industrial, and commercial use.

Why Are We Out on GNRC?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 7.1 percentage points
3. Eroding returns on capital suggest its historical profit centers are aging

At $151.47 per share, Generac trades at 18.5x forward P/E. Check out our free in-depth research report to learn more about why GNRC doesn’t pass our bar.

One Momentum Stock to Watch:

DXP (DXPE)

One-Month Return: +17.1%

Founded during the emergence of Big Oil in Texas, DXP (NASDAQ:DXPE) provides pumps, valves, and other industrial components.

Why Are We Positive On DXPE?

1. Operating margin improvement of 5.6 percentage points over the last five years demonstrates its ability to scale efficiently
2. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. Rising returns on capital show management is finding more attractive investment opportunities

DXP is trading at $91.46 per share, or 16.6x 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

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking 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-small-cap company Comfort Systems (+782% 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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