The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to some combination of positive news, upbeat results, or supportive macro developments. As such, investors are taking notice and bidding up shares.
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 that may correct.
Two Momentum Stocks to Sell:
European Wax Center (EWCZ)
One-Month Return: +45.8%
Founded by two siblings, European Wax Center (NASDAQ: EWCZ) is a beauty and waxing salon chain specializing in professional wax services and skincare products.
Why Do We Steer Clear of EWCZ?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Earnings growth underperformed the sector average over the last four years as its EPS grew by just 4% annually
- Low returns on capital reflect management’s struggle to allocate funds effectively
European Wax Center is trading at $5.72 per share, or 10.7x forward P/E. If you’re considering EWCZ for your portfolio, see our FREE research report to learn more.
Envista (NVST)
One-Month Return: +22.2%
Uniting more than 30 trusted brands including Nobel Biocare, Ormco, and DEXIS under one corporate umbrella, Envista Holdings (NYSE: NVST) is a global dental products company that provides equipment, consumables, and specialized technologies for dental professionals.
Why Are We Out on NVST?
- 2.9% annual revenue growth over the last two years was slower than its healthcare peers
- Push for growth has led to negative returns on capital, signaling value destruction, and its falling returns suggest its earlier profit pools are drying up
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $29.13 per share, Envista trades at 20.3x forward P/E. Check out our free in-depth research report to learn more about why NVST doesn’t pass our bar.
One Momentum Stock to Buy:
Powell (POWL)
One-Month Return: +31.1%
Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE: POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.
Why Will POWL Beat the Market?
- Demand is greater than supply as the company’s 15.4% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Additional sales over the last two years increased its profitability as the 58.2% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin grew by 22 percentage points over the last five years, giving the company more chips to play with
Powell’s stock price of $547.85 implies a valuation ratio of 31.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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 6 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
