1 Surging Stock with Exciting Potential and 2 We Brush Off
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.
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 the fundamentals to back up its performance and two best left ignored.
Two Momentum Stocks to Sell:
Twilio (TWLO)
One-Month Return: +15.7%
Known for the clever "Twilio Magic" demo that had developers creating functioning communications apps in minutes, Twilio (NYSE:TWLO) provides a platform that enables businesses to communicate with their customers through voice, messaging, email, and other digital channels.
Why Are We Cautious About TWLO?
- Revenue increased by 14.7% annually over the last two years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Sky-high servicing costs result in an inferior gross margin of 48.6% that must be offset through increased usage
- Operating margin expanded by 3.7 percentage points over the last year as it scaled and became more efficient
Twilio’s stock price of $227.37 implies a valuation ratio of 6x forward price-to-sales. To fully understand why you should be careful with TWLO, check out our full research report (it’s free).
Freshpet (FRPT)
One-Month Return: +17.8%
Standing out from typical processed pet foods, Freshpet (NASDAQ:FRPT) is a pet food company whose product portfolio includes natural meals and treats for dogs and cats.
Why Do We Think Twice About FRPT?
- Modest revenue base of $1.18 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Poor free cash flow margin of 2.4% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- ROIC of 0.6% reflects management’s challenges in identifying attractive investment opportunities
At $70.24 per share, Freshpet trades at 42.1x forward P/E. Check out our free in-depth research report to learn more about why FRPT doesn’t pass our bar.
One Momentum Stock to Buy:
Crescent Energy (CRGY)
One-Month Return: +23.4%
Controlling over 1.4 million net acres across proven U.S. basins, Crescent Energy (NYSE:CRGY) extracts oil and natural gas from underground reservoirs in Texas and the Rocky Mountains.
Why Is CRGY a Good Business?
- Annual revenue growth of 36.2% over the past five years was outstanding, reflecting market share gains this cycle
- Attractive asset base are reflected in its stellar gross margin of 60.2%
- Strong free cash flow margin of 16.9% enables it to reinvest or return capital consistently
Crescent Energy is trading at $14.10 per share, or 6.3x 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
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.