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. All that said, here is one stock with the fundamentals to back up its performance and two not so much.
Two Stocks to Sell:
Tapestry (TPR)
One-Month Return: +22%
Originally founded as Coach, Tapestry (NYSE:TPR) is an American fashion conglomerate with a portfolio of luxury brands offering high-quality accessories and fashion products.
Why Do We Avoid TPR?
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Tapestry is trading at $128.98 per share, or 22.4x forward P/E. Read our free research report to see why you should think twice about including TPR in your portfolio.
Sonos (SONO)
One-Month Return: +2.2%
A pioneer in connected home audio systems, Sonos (NASDAQ:SONO) offers a range of premium wireless speakers and sound systems.
Why Do We Think SONO Will Underperform?
- Muted 1.7% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Low free cash flow margin of 8.2% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Sonos’s stock price of $18.04 implies a valuation ratio of 20.5x forward P/E. Dive into our free research report to see why there are better opportunities than SONO.
One Stock to Buy:
KLA Corporation (KLAC)
One-Month Return: +11.5%
Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ:KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips.
Why Will KLAC Beat the Market?
- Annual revenue growth of 16.1% over the past five years was outstanding, reflecting market share gains this cycle
- Offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 60.6%
- Strong free cash flow margin of 30.8% enables it to reinvest or return capital consistently
At $1,268 per share, KLA Corporation trades at 33.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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-micro-cap company Kadant (+351% 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.