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.

While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. Keeping that in mind, here is one stock we think lives up to the hype and two not so much.

Two Momentum Stocks to Sell:

Magnachip (MX)

One-Month Return: +20.3%

With its technology found in common consumer electronics such as TVs and smartphones, Magnachip Semiconductor (NYSE: MX) is a provider of analog and mixed-signal semiconductors.

Why Do We Think MX Will Underperform?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 16.2% annually over the last five years
2. Earnings per share have contracted by 16.8% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
3. Increased cash burn over the last five years raises questions about the return timeline for its investments

Magnachip is trading at $3.11 per share, or 0.6x forward price-to-sales. Check out our free in-depth research report to learn more about why MX doesn’t pass our bar.

Plug Power (PLUG)

One-Month Return: +22.1%

Powering forklifts for Walmart’s distribution centers, Plug Power (NASDAQ: PLUG) provides hydrogen fuel cells used to power electric motors.

Why Do We Think Twice About PLUG?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 12.8% annually over the last two years
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Plug Power’s stock price of $2.41 implies a valuation ratio of 3.3x forward price-to-sales. Read our free research report to see why you should think twice about including PLUG in your portfolio.

One Momentum Stock to Buy:

Lam Research (LRCX)

One-Month Return: +37.3%

Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ: LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.

Why Is LRCX a Good Business?

1. Impressive 11.2% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Free cash flow margin expanded by 9.4 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
3. ROIC punches in at 64.3%, illustrating management’s expertise in identifying profitable investments

At $241.41 per share, Lam Research trades at 44.3x 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

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 6 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.