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.
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 are two stocks we think live up to the hype and one not so much.
One Stock to Sell:
Ducommun (DCO)
One-Month Return: +11.4%
California’s oldest company, Ducommun (NYSE: DCO) is a provider of engineering and manufacturing services for high-performance products primarily within the aerospace and defense industries.
Why Are We Out on DCO?
- Sales pipeline suggests its future revenue growth may not meet our standards as its average backlog growth of 4.8% for the past two years was weak
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.1% for the last five years
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Ducommun’s stock price of $74.05 implies a valuation ratio of 19.3x forward P/E. Check out our free in-depth research report to learn more about why DCO doesn’t pass our bar.
Two Stocks to Watch:
Roblox (RBLX)
One-Month Return: +30.6%
Best known for its wide assortment of user-generated content, Roblox (NYSE: RBLX) is an online gaming platform and game creation system.
Why Do We Watch RBLX?
- Daily Active Users are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Brand halo makes it a customer acquisition machine that onboards new users at scale without spending much money
- Highly efficient business model is illustrated by its impressive 20.5% EBITDA margin
At $96 per share, Roblox trades at 55.3x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
Tenet Healthcare (THC)
One-Month Return: +4.5%
With a network spanning nine states and serving primarily urban and suburban communities, Tenet Healthcare (NYSE: THC) operates a nationwide network of hospitals, ambulatory surgery centers, and outpatient facilities providing acute care and specialty healthcare services.
Why Do We Like THC?
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are growing as it capitalizes on even better market opportunities
- Rising returns on capital show management is finding more attractive investment opportunities
Tenet Healthcare is trading at $161.57 per share, or 12.7x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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 Exlservice (+354% 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.
