Each stock in this article is trading near its 52-week high. These elevated prices usually indicate some degree of investor confidence, business improvements, or favorable market conditions.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. On that note, here is one stock with lasting competitive advantages and two that may correct.
Two Stocks to Sell:
Zillow (ZG)
One-Month Return: +7.2%
Founded by Expedia co-founders Lloyd Frink and Rich Barton, Zillow (NASDAQ: ZG) is the leading U.S. online real estate marketplace.
Why Do We Steer Clear of ZG?
- Annual revenue declines of 7.8% over the last five years indicate problems with its market positioning
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Zillow is trading at $84.50 per share, or 44.5x forward P/E. Check out our free in-depth research report to learn more about why ZG doesn’t pass our bar.
Crane NXT (CXT)
One-Month Return: +4.9%
Born from a corporate transformation completed in 2023, Crane NXT (NYSE: CXT) provides specialized technology solutions for payment processing, banknote security, and authentication systems for financial institutions and businesses.
Why Does CXT Give Us Pause?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 15% annually while its revenue grew
- 12 percentage point decline in its free cash flow margin over the last four years reflects the company’s increased investments to defend its market position
Crane NXT’s stock price of $62.61 implies a valuation ratio of 13.3x forward P/E. Dive into our free research report to see why there are better opportunities than CXT.
One Stock to Watch:
ResMed (RMD)
One-Month Return: +4.1%
Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE: RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use.
Why Is RMD on Our Radar?
- Average constant currency growth of 10.3% over the past two years demonstrates its ability to grow internationally despite currency fluctuations
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 14.9% over the last five years outstripped its revenue performance
- Free cash flow margin increased by 12.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $284.72 per share, ResMed trades at 27.5x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. 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-small-cap company Exlservice (+354% 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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