Exciting developments are taking place for the stocks in this article. They’ve all surged ahead of the broader market over the last month as catalysts such as new products and positive media coverage have propelled their returns.
However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. Keeping that in mind, here are two stocks with lasting competitive advantages and one that may correct.
One Momentum Stock to Sell:
Bloomin' Brands (BLMN)
One-Month Return: +4.7%
Owner of the iconic Australian-themed Outback Steakhouse, Bloomin’ Brands (NASDAQ:BLMN) is a leading American restaurant company that owns and operates a portfolio of popular restaurant brands.
Why Is BLMN Risky?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 3.3 percentage points
- 5× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Bloomin' Brands is trading at $8.05 per share, or 4.4x forward price-to-earnings. To fully understand why you should be careful with BLMN, check out our full research report (it’s free).
Two Momentum Stocks to Watch:
Palantir (PLTR)
One-Month Return: +42.1%
Started by Peter Thiel after seeing US defence agencies struggle in the aftermath of the 2001 terrorist attacks, Palantir (NYSE:PLTR) offers software as a service platform that helps government agencies and large enterprises use data to make better decisions.
Why Are We Backing PLTR?
- Billings growth has averaged 25.7% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Demand for the next 12 months is expected to accelerate above its three-year trend as Wall Street forecasts robust revenue growth of 30.8%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Palantir’s stock price of $120.30 implies a valuation ratio of 79.9x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
CACI (CACI)
One-Month Return: +16.2%
Founded to commercialize SIMSCRIPT, CACI International (NYSE:CACI) offers defense, intelligence, and IT solutions to support national security and government transformation efforts.
Why Are We Positive On CACI?
- Average backlog growth of 13% over the past two years shows it has a steady sales pipeline that will drive future orders
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
At $430 per share, CACI trades at 17.2x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.