1 Momentum Stock to Target This Week and 2 We Brush Off

The stocks in this article are all trading near their 52-week highs. This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance.

However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. All that said, here is one stock with lasting competitive advantages and two that may correct.

Two Stocks to Sell:

Encompass Health (EHC)

One-Month Return: +0.7%

With a network of 161 specialized facilities across 37 states and Puerto Rico, Encompass Health (NYSE:EHC) operates inpatient rehabilitation hospitals that help patients recover from strokes, hip fractures, and other debilitating conditions.

Why Are We Wary of EHC?

1. 4.3% annual revenue growth over the last five years was slower than its healthcare peers
2. 1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Encompass Health’s stock price of $124.52 implies a valuation ratio of 23.6x forward P/E. Check out our free in-depth research report to learn more about why EHC doesn’t pass our bar.

Stewart Information Services (STC)

One-Month Return: +3.2%

Founded in 1893 during America's westward expansion when property records were often disputed, Stewart Information Services (NYSE:STC) provides title insurance and real estate services, helping homebuyers, sellers, and lenders verify property ownership and protect against title defects.

Why Does STC Worry Us?

1. Growth in insurance policies was lackluster over the last two years as its 1.3% annual growth underperformed the typical financial institution
2. Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
3. Capital trends were unexciting over the last two years as its 1.6% annual book value per share growth was below the typical insurance firm

Stewart Information Services is trading at $72.78 per share, or 1.4x forward P/B. Dive into our free research report to see why there are better opportunities than STC.

One Stock to Buy:

Nova (NVMI)

One-Month Return: +37.2%

Headquartered in Israel, Nova (NASDAQ:NVMI) is a provider of quality control systems used in semiconductor manufacturing.

Why Are We Bullish on NVMI?

1. Market share has increased this cycle as its 21.1% annual revenue growth over the last two years was exceptional
2. Earnings per share have massively outperformed its peers over the last five years, increasing by 34.1% annually
3. NVMI is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

At $325.36 per share, Nova trades at 38.1x forward P/E. Is now the time to initiate a position? Find out 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 6 Stocks for this week. 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 Tecnoglass (+1,754% 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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