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 the fundamentals to back up their performance and one best left ignored.
One Momentum Stock to Sell:
The Cheesecake Factory (CAKE)
One-Month Return: +27.9%
Celebrated for its delicious (and free) brown bread, gigantic portions, and delectable desserts, Cheesecake Factory (NASDAQ: CAKE) is an iconic American restaurant chain that also owns and operates a portfolio of separate restaurant brands.
Why Are We Wary of CAKE?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Estimated sales growth of 4.7% for the next 12 months implies demand will slow from its seven-year trend
- High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $76.37 per share, The Cheesecake Factory trades at 18x forward P/E. Read our free research report to see why you should think twice about including CAKE in your portfolio.
Two Momentum Stocks to Watch:
AAR (AIR)
One-Month Return: +27.4%
The first third-party MRO approved by the FAA for Safety Management System Requirements, AAR (NYSE: AIR) is a provider of aircraft maintenance services
Why Are We Bullish on AIR?
- Annual revenue growth of 18.6% over the past two years was outstanding, reflecting market share gains this cycle
- Expected revenue growth of 14.3% for the next year suggests its market share will rise
- Earnings per share grew by 19.5% annually over the last two years and trumped its peers
AAR’s stock price of $132.25 implies a valuation ratio of 24.4x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Affiliated Managers Group (AMG)
One-Month Return: +19.7%
Using a partnership approach that preserves entrepreneurial culture at its portfolio companies, Affiliated Managers Group (NYSE: AMG) is an investment firm that acquires stakes in boutique asset management companies while allowing them to maintain operational independence.
Why Could AMG Be a Winner?
- Performance over the past two years was boosted by share buybacks, which enabled its earnings per share to grow faster than its revenue
- ROE punches in at 21.3%, illustrating management’s expertise in identifying profitable investments
Affiliated Managers Group is trading at $355.69 per share, or 9.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
