1 Momentum Stock to Keep an Eye On and 2 We Ignore

Great things are happening to the stocks in this article. They’re all outperforming the market over the last month because of positive catalysts such as a new product line, constructive news flow, or even a loyal Reddit fanbase.

However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. On that note, here is one stock we think lives up to the hype and two that may correct.

Two Momentum Stocks to Sell:

DaVita (DVA)

One-Month Return: +41.4%

With over 2,600 dialysis centers across the United States and a presence in 13 countries, DaVita (NYSE:DVA) operates a network of dialysis centers providing treatment and care for patients with chronic kidney disease and end-stage kidney disease.

Why Are We Cautious About DVA?

1. Flat treatments over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
2. Estimated sales growth of 2.4% for the next 12 months implies demand will slow from its two-year trend
3. Free cash flow margin shrank by 1.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

DaVita’s stock price of $147 implies a valuation ratio of 10.6x forward P/E. Check out our free in-depth research report to learn more about why DVA doesn’t pass our bar.

Sysco (SYY)

One-Month Return: +17%

Powering more than 730,000 commercial kitchens across North America and Europe, Sysco (NYSE:SYY) is a global food distributor that supplies restaurants, healthcare facilities, schools, hotels, and other foodservice establishments with food products and related services.

Why Do We Think SYY Will Underperform?

1. Unit sales averaged 1.1% growth over the past two years and imply healthy demand for its products
2. Free cash flow margin is forecasted to grow by 1.3 percentage points in the coming year, potentially giving the company more chips to play with
3. ROIC hasn’t moved, making investors question whether its recent investments can increase profitability

Sysco is trading at $89.54 per share, or 18.8x forward P/E. Read our free research report to see why you should think twice about including SYY in your portfolio.

One Momentum Stock to Watch:

WD-40 (WDFC)

One-Month Return: +18.6%

Short for “Water Displacement perfected on the 40th try”, WD-40 (NASDAQ:WDFC) is a renowned American consumer goods company known for its iconic and versatile spray, WD-40 Multi-Use Product.

Why Is WDFC Interesting?

1. Differentiated product offerings are difficult to replicate at scale and result in a premier gross margin of 54.5%
2. Robust free cash flow margin of 12.6% gives it many options for capital deployment
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are climbing as it finds even more attractive growth opportunities

At $245.00 per share, WD-40 trades at 38.9x 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

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.