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 lasting competitive advantages and two best left ignored.
Two Momentum Stocks to Sell:
Tilly's (TLYS)
One-Month Return: +20.4%
With an emphasis on skate and surf culture, Tilly’s (NYSE:TLYS) is a specialty retailer that sells clothing, footwear, and accessories geared towards fashion-forward teens and young adults.
Why Are We Out on TLYS?
- Store closures are a headwind for growth and suggest it’s rightsizing operations to optimize sales at existing locations
- Suboptimal cost structure is highlighted by its history of operating margin losses
Tilly’s stock price of $4.43 implies a valuation ratio of 37x forward P/E. If you’re considering TLYS for your portfolio, see our FREE research report to learn more.
Illumina (ILMN)
One-Month Return: +20.1%
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 revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Earnings per share fell by 3% annually over the last five years while its revenue grew, partly because it diluted shareholders
- Negative returns on capital show management lost money while trying to expand the business
Illumina is trading at $232.04 per share, or 39x forward P/E. To fully understand why you should be careful with ILMN, check out our full research report (it’s free).
One Momentum Stock to Buy:
ServiceNow (NOW)
One-Month Return: +18.9%
Built on a single code base that processes more than 80 billion workflows and 6.5 trillion transactions annually, ServiceNow (NYSE:NOW) provides a cloud-based platform that helps organizations automate and digitize workflows across departments, from IT and HR to customer service and security.
Why Is NOW a Good Business?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Robust free cash flow margin of 33.4% gives it many options for capital deployment
At $139.92 per share, ServiceNow trades at 8.3x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.