Exciting developments are taking place for the stocks in this article. They’ve all surged ahead of the broader market over the last month as catalysts such as new products and positive media coverage have propelled their returns.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. Keeping that in mind, here is one stock we think lives up to the hype and two that may correct.
Two Momentum Stocks to Sell:
FormFactor (FORM)
One-Month Return: +40.3%
With customers across the foundry and fabless markets, FormFactor (NASDAQ:FORM) is a US-based provider of test and measurement technologies for semiconductors.
Why Does FORM Worry Us?
- Sales trends were unexciting over the last five years as its 3.1% annual growth was below the typical semiconductor company
- Gross margin of 41.4% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Investment activity picked up over the last five years, pressuring its weak free cash flow margin of 6.3%
FormFactor is trading at $161.50 per share, or 57.2x forward P/E. Dive into our free research report to see why there are better opportunities than FORM.
BJ's (BJRI)
One-Month Return: +30%
Founded in 1978 in California, BJ’s Restaurants (NASDAQ:BJRI) is a chain of restaurants whose menu features classic American dishes, often with a twist.
Why Should You Dump BJRI?
- Sales trends were unexciting over the last seven years as its 3.2% annual growth was below the typical restaurant company
- Anticipated sales growth of 2.9% for the next year implies demand will be shaky
- Lacking pricing power results in an inferior gross margin of 15.1% that must be offset by turning more tables
BJ’s stock price of $60.72 implies a valuation ratio of 25x forward P/E. Read our free research report to see why you should think twice about including BJRI in your portfolio.
One Momentum Stock to Watch:
VSE Corporation (VSEC)
One-Month Return: +26.7%
With roots dating back to 1959 and a strategic focus on extending the life of transportation assets, VSE Corporation (NASDAQ:VSEC) provides aftermarket parts distribution and maintenance, repair, and overhaul services for aircraft and vehicle fleets in commercial and government markets.
Why Do We Watch VSEC?
- Market share has increased this cycle as its 13.7% annual revenue growth over the last two years was exceptional
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 66.4%
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
At $228.49 per share, VSE Corporation trades at 50.4x forward P/E. Is now the right 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 (+1,326% 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.