The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to some combination of positive news, upbeat results, or supportive macro developments. As such, investors are taking notice and bidding up shares.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. All that said, here are two stocks we think live up to the hype and one not so much.
One Momentum Stock to Sell:
The Cheesecake Factory (CAKE)
One-Month Return: +37.4%
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 Cautious About CAKE?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Operating margin of 5.3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- High net-debt-to-EBITDA ratio of 5× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $112.61 per share, The Cheesecake Factory trades at 24.1x forward P/E. To fully understand why you should be careful with CAKE, check out our full research report (it’s free).
Two Momentum Stocks to Watch:
CACI (CACI)
One-Month Return: +39.4%
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 Fans of CACI?
- Impressive 11.8% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Share buybacks catapulted its annual earnings per share growth to 19%, which outperformed its revenue gains over the last two years
CACI’s stock price of $666.53 implies a valuation ratio of 19.3x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Gartner (IT)
One-Month Return: +30.9%
With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE: IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities.
Why Are We Positive on IT?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 8.1% annual sales growth over the last five years
- IT is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
- Returns on capital are growing as management capitalizes on its market opportunities
Gartner is trading at $185.00 per share, or 12.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
