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.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. All that said, here is one stock with lasting competitive advantages and two that may correct.
Two Momentum Stocks to Sell:
nLIGHT (LASR)
One-Month Return: +29.4%
Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ: LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.
Why Do We Avoid LASR?
- 2.6% annual revenue growth over the last five years was slower than its industrials peers
- Cash burn has widened over the last five years, making us question whether it can reliably generate shareholder value
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
nLIGHT is trading at $56.84 per share, or 193.9x forward P/E. If you’re considering LASR for your portfolio, see our FREE research report to learn more.
Regal Rexnord (RRX)
One-Month Return: +38.2%
Headquartered in Milwaukee, Regal Rexnord (NYSE: RRX) provides power transmission and industrial automation products.
Why Are We Wary of RRX?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 2.6% annually
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its decreasing returns suggest its historical profit centers are aging
Regal Rexnord’s stock price of $215.64 implies a valuation ratio of 20x forward P/E. To fully understand why you should be careful with RRX, check out our full research report (it’s free).
One Momentum Stock to Watch:
Vicor (VICR)
One-Month Return: +9.6%
Founded by a researcher at the Massachusetts Institute of Technology, Vicor (NASDAQ: VICR) provides electrical power conversion and delivery products for a range of industries.
Why Is VICR on Our Radar?
- Offerings are difficult to replicate at scale and result in a best-in-class gross margin of 49.8%
- Earnings growth has beaten its peers over the last two years as its EPS has compounded at 48.1% annually
- Free cash flow margin jumped by 28.1 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $168.00 per share, Vicor trades at 59x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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 5 Growth Stocks for this month. 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.
