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 is one stock with lasting competitive advantages and two not so much.
Two Momentum Stocks to Sell:
Illumina (ILMN)
One-Month Return: +31.6%
Pioneering the ability to read the human genome at unprecedented speed and affordability, Illumina (NASDAQ: ILMN) develops and sells advanced DNA sequencing and microarray technologies that allow researchers and clinicians to analyze genetic variations and functions.
Why Does ILMN Worry Us?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Earnings per share fell by 2.2% annually over the last five years while its revenue grew, partly because it diluted shareholders
- ROIC of -0.7% reflects management’s challenges in identifying attractive investment opportunities
At $119.72 per share, Illumina trades at 25.1x forward P/E. Dive into our free research report to see why there are better opportunities than ILMN.
10x Genomics (TXG)
One-Month Return: +44.5%
Founded in 2012 by scientists seeking to overcome limitations in traditional biological research methods, 10x Genomics (NASDAQ: TXG) develops instruments, consumables, and software that enable researchers to analyze biological systems at single-cell resolution and spatial context.
Why Are We Wary of TXG?
- Annual revenue growth of 4.2% over the last two years was below our standards for the healthcare sector
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Negative returns on capital show management lost money while trying to expand the business
10x Genomics’s stock price of $16.67 implies a valuation ratio of 3.5x forward price-to-sales. Check out our free in-depth research report to learn more about why TXG doesn’t pass our bar.
One Momentum Stock to Watch:
Parker-Hannifin (PH)
One-Month Return: +14.6%
Founded in 1917, Parker Hannifin (NYSE: PH) is a manufacturer of motion and control systems for a wide variety of mobile, industrial and aerospace markets.
Why Do We Watch PH?
- Highly efficient business model is illustrated by its impressive 18.2% operating margin, and its operating leverage amplified its profits over the last five years
- Share repurchases over the last five years enabled its annual earnings per share growth of 20.7% to outpace its revenue gains
- PH is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute
Parker-Hannifin is trading at $843.80 per share, or 27.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check 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 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
