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.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. On that note, here is one stock with lasting competitive advantages and two that may correct.
Two Momentum Stocks to Sell:
Rapid7 (RPD)
One-Month Return: +11.6%
With its name inspired by the need for quick responses to cyber threats, Rapid7 (NASDAQ: RPD) provides cybersecurity software and services that help organizations detect vulnerabilities, monitor threats, and respond to security incidents.
Why Do We Pass on RPD?
- Billings didn’t grow over the last year, suggesting the company struggled to sell its software and might have to lower prices to stimulate growth
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 1.7 percentage points
At $6.51 per share, Rapid7 trades at 0.5x forward price-to-sales. Read our free research report to see why you should think twice about including RPD in your portfolio.
Archer-Daniels-Midland (ADM)
One-Month Return: +17.2%
Transforming crops from the world's most productive agricultural regions into everyday essentials, Archer-Daniels-Midland (NYSE: ADM) processes and transports agricultural commodities like grains and oilseeds while manufacturing ingredients for food, beverages, feed, and industrial applications.
Why Are We Wary of ADM?
- Sales tumbled by 7.5% annually over the last three years, showing consumer trends are working against its favor
- Commoditized products, bad unit economics, and high competition are reflected in its low gross margin of 6.3%
- Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
Archer-Daniels-Midland’s stock price of $80.15 implies a valuation ratio of 15.3x forward P/E. To fully understand why you should be careful with ADM, check out our full research report (it’s free).
One Momentum Stock to Buy:
Atlassian (TEAM)
One-Month Return: +21.9%
Started by two Australian university friends who funded their startup with credit cards, Atlassian (NASDAQ: TEAM) provides software tools that help teams plan, track, collaborate, and share knowledge across organizations.
Why Will TEAM Beat the Market?
- Software is difficult to replicate at scale and leads to a premier gross margin of 84.8%
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Free cash flow margin is anticipated to expand by 9 percentage points over the next year, providing additional flexibility for investments and share buybacks/dividends
Atlassian is trading at $87.13 per share, or 3x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week - FREE. Get Our Top 9 Market-Beating 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
