The stocks in this article are all trading near their 52-week highs. This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance.
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 we think lives up to the hype and two not so much.
Two Stocks to Sell:
Zurn Elkay (ZWS)
One-Month Return: +4.4%
Claiming to have saved more than 30 billion gallons of water, Zurn Elkay (NYSE:ZWS) provides water management solutions to various industries.
Why Are We Out on ZWS?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Performance over the past five years was negatively impacted by new share issuances as its earnings per share dropped by 6.1% annually, worse than its revenue
- 5.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Zurn Elkay’s stock price of $47.27 implies a valuation ratio of 33.4x forward P/E. If you’re considering ZWS for your portfolio, see our FREE research report to learn more.
U.S. Cellular (USM)
One-Month Return: +1.4%
Operating as a majority-owned subsidiary of Telephone and Data Systems since its founding in 1983, US Cellular (NYSE:USM) is a regional wireless telecommunications provider serving 4.6 million customers across 21 states with mobile phone, internet, and IoT services.
Why Should You Dump USM?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.6% annually over the last five years
- Inability to adjust its cost structure while its revenue declined over the last five years led to a 5.2 percentage point drop in the company’s adjusted operating margin
- Earnings per share have dipped by 16.5% annually over the past five years, which is concerning because stock prices follow EPS over the long term
U.S. Cellular is trading at $77.01 per share, or 7.7x forward EV-to-EBITDA. To fully understand why you should be careful with USM, check out our full research report (it’s free).
One Stock to Buy:
Comfort Systems (FIX)
One-Month Return: +6.5%
Formed through the merger of 12 companies, Comfort Systems (NYSE:FIX) provides mechanical and electrical contracting services.
Why Are We Backing FIX?
- Demand is greater than supply as the company’s 29.5% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Rising returns on capital show management is finding more attractive investment opportunities
At $765 per share, Comfort Systems trades at 38.3x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking 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 183% over the last five years (as of March 31st 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 Tecnoglass (+1,754% 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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