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:
Enpro (NPO)
One-Month Return: +6.6%
Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE:NPO) designs, manufactures, and sells products used for machinery in various industries.
Why Is NPO Not Exciting?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Earnings per share lagged its peers over the last two years as they only grew by 4.7% annually
- Underwhelming 6.5% return on capital reflects management’s difficulties in finding profitable growth opportunities
Enpro’s stock price of $233.27 implies a valuation ratio of 27.1x forward P/E. To fully understand why you should be careful with NPO, check out our full research report (it’s free).
GATX (GATX)
One-Month Return: +4.4%
Originally founded to ship beer, GATX (NYSE:GATX) provides leasing and management services for railcars and other transportation assets globally.
Why Do We Think Twice About GATX?
- Number of active railcars has disappointed over the past two years, indicating weak demand for its offerings
- Cash-burning history makes us doubt the long-term viability of its business model
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
GATX is trading at $175.85 per share, or 18.4x forward P/E. Dive into our free research report to see why there are better opportunities than GATX.
One Stock to Buy:
Merck (MRK)
One-Month Return: +10.3%
With roots dating back to 1891 and a portfolio that includes the blockbuster cancer immunotherapy Keytruda, Merck (NYSE:MRK) develops and sells prescription medicines, vaccines, and animal health products across oncology, infectious diseases, cardiovascular, and other therapeutic areas.
Why Are We Bullish on MRK?
- Massive revenue base of $64.23 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
- Adjusted operating margin expanded by 21 percentage points over the last two years as it scaled and became more efficient
- Strong free cash flow margin of 22.1% enables it to reinvest or return capital consistently, and its improved cash conversion implies it’s becoming a less capital-intensive business
At $110.60 per share, Merck trades at 14.3x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. 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.