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.
However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. On that note, here is one stock we think lives up to the hype and two that may correct.
Two Momentum Stocks to Sell:
Tapestry (TPR)
One-Month Return: +22.3%
Originally founded as Coach, Tapestry (NYSE: TPR) is an American fashion conglomerate with a portfolio of luxury brands offering high-quality accessories and fashion products.
Why Is TPR Risky?
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Operating margin of 11.7% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $129.26 per share, Tapestry trades at 23x forward P/E. Read our free research report to see why you should think twice about including TPR in your portfolio.
Warner Bros. Discovery (WBD)
One-Month Return: +27.7%
Formed from the merger of WarnerMedia and Discovery, Warner Bros. Discovery (NASDAQ: WBD) is a multinational media and entertainment company, offering television networks, streaming services, and film and television production.
Why Do We Pass on WBD?
- Products and services aren't resonating with the market as its revenue declined by 5.1% annually over the last two years
- Free cash flow margin is projected to show no improvement next year
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Warner Bros. Discovery is trading at $29.19 per share, or 11.6x forward EV-to-EBITDA. If you’re considering WBD for your portfolio, see our FREE research report to learn more.
One Momentum Stock to Watch:
Coherent (COHR)
One-Month Return: +26.5%
Created through the 2022 rebranding of II-VI Incorporated, a company with roots dating back to 1971, Coherent (NYSE: COHR) develops and manufactures advanced materials, lasers, and optical components for applications ranging from telecommunications to industrial manufacturing.
Why Do We Watch COHR?
- Market share has increased this cycle as its 16.9% annual revenue growth over the last five years was exceptional
- Projected revenue growth of 14.9% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Earnings per share have massively outperformed its peers over the last two years, increasing by 38.4% annually
Coherent’s stock price of $192.11 implies a valuation ratio of 35.3x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. 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.
