1 Momentum Stock on Our Watchlist and 2 We Ignore

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.

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 lasting competitive advantages and two not so much.

Two Stocks to Sell:

Wayfair (W)

One-Month Return: +17.4%

Founded in 2002 by Niraj Shah, Wayfair (NYSE:W) is a leading online retailer of mass-market home goods in the US, UK, Canada, and Germany.

Why Does W Worry Us?

1. Value proposition isn’t resonating strongly as its active customers averaged 1.8% drops over the last two years
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 5.2%
3. Gross margin of 30.2% is below its competitors, leaving less money to invest in areas like marketing and R&D

At $98.82 per share, Wayfair trades at 16.3x forward EV/EBITDA. If you’re considering W for your portfolio, see our FREE research report to learn more.

State Street (STT)

One-Month Return: +0.1%

Dating back to 1792 when Boston's Long Wharf was the center of global shipping and trade, State Street (NYSE:STT) provides custody, investment management, and other financial services to institutional investors like pension funds, asset managers, and central banks worldwide.

Why Is STT Not Exciting?

1. Annual sales growth of 3% over the last five years lagged behind its financials peers as its large revenue base made it difficult to generate incremental demand
2. Earnings per share lagged its peers over the last five years as they only grew by 7.3% annually

State Street’s stock price of $117 implies a valuation ratio of 10.5x forward P/E. Check out our free in-depth research report to learn more about why STT doesn’t pass our bar.

One Stock to Watch:

Xylem (XYL)

One-Month Return: -0.2%

Formed through a spinoff, Xylem (NYSE:XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.

Why Are We Fans of XYL?

1. Market share has increased this cycle as its 14.8% annual revenue growth over the last two years was exceptional
2. Offerings are difficult to replicate at scale and lead to a top-tier gross margin of 37.7%
3. Earnings growth has trumped its peers over the last five years as its EPS has compounded at 17.7% annually

Xylem is trading at $149.60 per share, or 27.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. 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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