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. On that note, here is one stock with the fundamentals to back up its performance and two that may correct.

Two Momentum Stocks to Sell:

FormFactor (FORM)

One-Month Return: +29.8%

With customers across the foundry and fabless markets, FormFactor (NASDAQ: FORM) is a US-based provider of test and measurement technologies for semiconductors.

Why Are We Hesitant About FORM?

1. Annual revenue growth of 2.5% over the last five years was below our standards for the semiconductor sector
2. Weak free cash flow margin of 5.9% has deteriorated further over the last five years as its investments increased
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its shrinking returns suggest its past profit sources are losing steam

At $94.15 per share, FormFactor trades at 51.8x forward P/E. If you’re considering FORM for your portfolio, see our FREE research report to learn more.

Callaway Golf Company (CALY)

One-Month Return: -9.2%

Formed between the merger of Callaway and Topgolf, Callaway Golf Company (NYSE: CALY) sells golf equipment and operates technology-driven golf entertainment venues.

Why Do We Think CALY Will Underperform?

1. Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2% for the last two years
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Callaway Golf Company’s stock price of $12.85 implies a valuation ratio of 66.4x forward P/E. Check out our free in-depth research report to learn more about why CALY doesn’t pass our bar.

One Momentum Stock to Watch:

CACI (CACI)

One-Month Return: -7.2%

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?

1. Demand is greater than supply as the company’s 11.5% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
2. Estimated revenue growth of 10.2% for the next 12 months implies its momentum over the last two years will continue
3. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue

CACI is trading at $560.85 per share, or 19.1x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

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 6 Stocks for this week. 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.