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.
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 not so much.
Two Momentum Stocks to Sell:
Estée Lauder (EL)
One-Month Return: +16.5%
Named after its founder, who was an entrepreneurial woman from New York with a passion for skincare, Estée Lauder (NYSE: EL) is a one-stop beauty shop with products in skincare, fragrance, makeup, sun protection, and men’s grooming.
Why Does EL Fall Short?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Inability to adjust its cost structure while its revenue declined over the last year led to a 8.3 percentage point drop in the company’s operating margin
- Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
Estée Lauder is trading at $108.81 per share, or 46.4x forward P/E. Read our free research report to see why you should think twice about including EL in your portfolio.
RXO (RXO)
One-Month Return: +7.4%
With access to millions of trucks, RXO (NYSE: RXO) offers full-truckload, less-than-truckload, and last-mile deliveries.
Why Are We Hesitant About RXO?
- Estimated sales decline of 2.4% for the next 12 months implies a challenging demand environment
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 5 percentage points
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 60.8% annually
At $13.07 per share, RXO trades at 310.7x forward P/E. To fully understand why you should be careful with RXO, check out our full research report (it’s free for active Edge members).
One Momentum Stock to Watch:
Carvana (CVNA)
One-Month Return: +31.2%
Known for its glass tower car vending machines, Carvana (NYSE: CVNA) provides a convenient automotive shopping experience by offering an online platform for buying and selling used cars.
Why Is CVNA Interesting?
- Retail Units Sold have grown by 31.4% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 38.5% outpaced its revenue gains
- Free cash flow margin increased by 19.3 percentage points over the last few years, giving the company more capital to invest or return to shareholders
Carvana’s stock price of $434.02 implies a valuation ratio of 25.5x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
