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.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. All that said, here is one stock with the fundamentals to back up its performance and two that may correct.
Two Momentum Stocks to Sell:
Q2 Holdings (QTWO)
One-Month Return: +19.1%
With a platform powering digital services for approximately 25 million account holders across America, Q2 Holdings (NYSE: QTWO) provides cloud-based digital solutions that help financial institutions, fintechs, and alternative finance companies deliver modern banking experiences to their customers.
Why Is QTWO Not Exciting?
- Underwhelming ARR growth of 11.3% over the last year suggests the company faced challenges in acquiring and retaining long-term customers
- Estimated sales growth of 10.7% for the next 12 months implies demand will slow from its two-year trend
- Gross margin of 53.4% reflects its high servicing costs
Q2 Holdings is trading at $73.32 per share, or 6x forward price-to-sales. Read our free research report to see why you should think twice about including QTWO in your portfolio.
Sanmina (SANM)
One-Month Return: +34.4%
Founded in 1980, Sanmina (NASDAQ: SANM) is an electronics manufacturing services company offering end-to-end solutions for various industries.
Why Are We Wary of SANM?
- Sales tumbled by 4.6% annually over the last two years, showing market trends are working against its favor during this cycle
- Gross margin of 8.3% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Earnings per share have contracted by 1.2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
At $168.47 per share, Sanmina trades at 20.3x forward P/E. Check out our free in-depth research report to learn more about why SANM doesn’t pass our bar.
One Momentum Stock to Watch:
Seagate Technology (STX)
One-Month Return: +28.4%
The developer of the original 5.25inch hard disk drive, Seagate (NASDAQ: STX) is a leading producer of data storage solutions, including hard drives and Solid State Drives (SSDs) used in PCs and data centers.
Why Could STX Be a Winner?
- Annual revenue growth of 18.5% over the past two years was outstanding, reflecting market share gains this cycle
- Demand will likely accelerate over the next 12 months as its forecasted revenue growth of 20% is above its two-year trend
- Operating margin expansion of 6.9 percentage points over the last five years shows the company optimized its expenses
Seagate Technology’s stock price of $281.90 implies a valuation ratio of 23.7x forward P/E. Is now the right 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 5 Strong Momentum 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 (+1,545% between March 2020 and March 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
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