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. All that said, here are two stocks with lasting competitive advantages and one best left ignored.
One Momentum Stock to Sell:
Commvault Systems (CVLT)
One-Month Return: +23%
Originally formed in 1988 as part of Bell Labs, Commvault (NASDAQ: CVLT) provides enterprise software used for data backup and recovery, cloud and infrastructure management, retention, and compliance.
Why Are We Wary of CVLT?
- Muted 9% annual revenue growth over the last three years shows its demand lagged behind its software peers
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 1.6 percentage points
Commvault Systems is trading at $176 per share, or 7.1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than CVLT.
Two Momentum Stocks to Buy:
The Trade Desk (TTD)
One-Month Return: +56.3%
Founded by former Microsoft engineers Jeff Green and Dave Pickles, The Trade Desk (NASDAQ:TTD) offers cloud-based software that uses data to help advertisers better plan, place, and target their online ads.
Why Will TTD Outperform?
- Average billings growth of 26.1% over the last year enhances its liquidity and shows there is steady demand for its products
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Highly efficient business model is illustrated by its impressive 17.6% operating margin, and its operating leverage amplified its profits over the last year
The Trade Desk’s stock price of $74.33 implies a valuation ratio of 13x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Axon (AXON)
One-Month Return: +33.4%
Providing body cameras and tasers for first responders, AXON (NASDAQ:AXON) develops technology solutions and weapons products for military, law enforcement, and civilians.
Why Are We Backing AXON?
- Unit sales averaged 32% growth over the past two years and imply healthy demand for its products
- Free cash flow margin expanded by 20.3 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Improving returns on capital suggest its past investments are beginning to deliver value
At $723 per share, Axon trades at 123.2x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free.