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. Keeping that in mind, here are two stocks we think live up to the hype and one not so much.
One Momentum Stock to Sell:
Shoals (SHLS)
One-Month Return: +10.5%
Started in Huntsville, Alabama, Shoals (NASDAQ:SHLS) designs and manufactures products that make solar energy systems work more efficiently.
Why Do We Think Twice About SHLS?
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 8.5% annually
- Free cash flow margin dropped by 8.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $8.20 per share, Shoals trades at 15.8x forward P/E. Dive into our free research report to see why there are better opportunities than SHLS.
Two Momentum Stocks to Watch:
DigitalOcean (DOCN)
One-Month Return: +8.5%
Built for simplicity in a world of complex cloud solutions, DigitalOcean (NYSE:DOCN) provides a simplified cloud computing platform that enables developers and small businesses to quickly deploy and scale applications.
Why Are We Positive on DOCN?
- Average billings growth of 25.2% over the last year enhances its liquidity and shows there is steady demand for its products
- Market share is on track to rise over the next 12 months as its 40.7% projected revenue growth implies demand will accelerate from its two-year trend
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
DigitalOcean is trading at $137.50 per share, or 12.5x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Hewlett Packard Enterprise (HPE)
One-Month Return: +23.8%
Born from the 2015 split of the iconic Silicon Valley pioneer Hewlett-Packard, Hewlett Packard Enterprise (NYSE:HPE) provides edge-to-cloud technology solutions that help businesses capture, analyze, and act upon their data across hybrid IT environments.
Why Will HPE Outperform?
- Offerings are pivotal for their customers’ operations as its ARR has averaged 48.5% growth over the past two years
- Unparalleled revenue scale of $41.87 billion gives it an edge in distribution
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 28.5% annually, topping its revenue gains
Hewlett Packard Enterprise’s stock price of $69.35 implies a valuation ratio of 14.9x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.