1 Momentum Stock Worth Your Attention and 2 Facing Headwinds

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.

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 we think lives up to the hype and two not so much.

Two Stocks to Sell:

Enpro (NPO)

One-Month Return: +6.6%

Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE:NPO) designs, manufactures, and sells products used for machinery in various industries.

Why Is NPO Not Exciting?

1. Sales stagnated over the last five years and signal the need for new growth strategies
2. Earnings per share lagged its peers over the last two years as they only grew by 4.7% annually
3. Underwhelming 6.5% return on capital reflects management’s difficulties in finding profitable growth opportunities

Enpro’s stock price of $233.27 implies a valuation ratio of 27.1x forward P/E. To fully understand why you should be careful with NPO, check out our full research report (it’s free).

GATX (GATX)

One-Month Return: +4.4%

Originally founded to ship beer, GATX (NYSE:GATX) provides leasing and management services for railcars and other transportation assets globally.

Why Do We Think Twice About GATX?

1. Number of active railcars has disappointed over the past two years, indicating weak demand for its offerings
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

GATX is trading at $175.85 per share, or 18.4x forward P/E. Dive into our free research report to see why there are better opportunities than GATX.

One Stock to Buy:

Merck (MRK)

One-Month Return: +10.3%

With roots dating back to 1891 and a portfolio that includes the blockbuster cancer immunotherapy Keytruda, Merck (NYSE:MRK) develops and sells prescription medicines, vaccines, and animal health products across oncology, infectious diseases, cardiovascular, and other therapeutic areas.

Why Are We Bullish on MRK?

1. Massive revenue base of $64.23 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
2. Adjusted operating margin expanded by 21 percentage points over the last two years as it scaled and became more efficient
3. Strong free cash flow margin of 22.1% enables it to reinvest or return capital consistently, and its improved cash conversion implies it’s becoming a less capital-intensive business

At $110.60 per share, Merck trades at 14.3x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

Check out the high-quality names we’ve flagged in 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 244% over the last five years (as of June 30, 2025).

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.