Each stock in this article is trading near its 52-week high. These elevated prices usually indicate some degree of investor confidence, business improvements, or favorable market conditions.
However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. Keeping that in mind, here is one stock with the fundamentals to back up its performance and two best left ignored.
Two Stocks to Sell:
ScanSource (SCSC)
One-Month Return: +16%
Operating as a crucial link in the technology supply chain since 1992, ScanSource (NASDAQ: SCSC) is a hybrid distributor that connects hardware, software, and cloud services from technology suppliers to resellers and business customers.
Why Are We Hesitant About SCSC?
- Annual sales declines of 4.9% for the past two years show its products and services struggled to connect with the market during this cycle
- Projected sales growth of 2.4% for the next 12 months suggests sluggish demand
- Poor free cash flow margin of 3.4% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
ScanSource is trading at $47.88 per share, or 11.1x forward P/E. Dive into our free research report to see why there are better opportunities than SCSC.
Citigroup (C)
One-Month Return: +4.5%
With operations in nearly 160 countries and a history dating back to 1812, Citigroup (NYSE: C) is a global financial services company that provides banking, investment, wealth management, and payment solutions to consumers, corporations, and governments.
Why Are We Cautious About C?
- Scale is a double-edged sword because it limits the firm’s growth potential compared to its smaller competitors, as reflected in its below-average annual net interest income increases of 7% for the last five years
- Earnings per share lagged its peers over the last five years as they only grew by 2.5% annually
- ROE of 7.5% reflects management’s challenges in identifying attractive investment opportunities
At $131.27 per share, Citigroup trades at 1.1x forward P/B. Check out our free in-depth research report to learn more about why C doesn’t pass our bar.
One Stock to Watch:
Cadence Design Systems (CDNS)
One-Month Return: +17.9%
Powering the chips behind everything from smartphones to AI accelerators for over 35 years, Cadence Design Systems (NASDAQ: CDNS) provides essential computational software, hardware, and intellectual property used by engineers to design and verify advanced electronic systems and semiconductors.
Why Does CDNS Catch Our Eye?
- Superior software functionality and low servicing costs are reflected in its best-in-class gross margin of 87.1%
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- CDNS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Cadence Design Systems’s stock price of $412.05 implies a valuation ratio of 17.8x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
