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. On that note, here is one stock with the fundamentals to back up its performance and two that may correct.
Two Stocks to Sell:
Adtalem (ATGE)
One-Month Return: +10.2%
Formerly known as DeVry Education Group, Adtalem Global Education (NYSE:ATGE) is a global provider of workforce solutions and educational services.
Why Are We Wary of ATGE?
- Muted 11% annual revenue growth over the last two years shows its demand lagged behind its consumer discretionary peers
- Estimated sales growth of 7.5% for the next 12 months implies demand will slow from its two-year trend
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $148.49 per share, Adtalem trades at 19.7x forward P/E. To fully understand why you should be careful with ATGE, check out our full research report (it’s free for active Edge members).
Teledyne (TDY)
One-Month Return: +7.4%
Playing a role in mapping the ocean floor as we know it today, Teledyne (NYSE:TDY) offers digital imaging and instrumentation products for various industries.
Why Does TDY Fall Short?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Free cash flow margin shrank by 2.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- ROIC of 6.7% reflects management’s challenges in identifying attractive investment opportunities
Teledyne is trading at $587.62 per share, or 26x forward P/E. Read our free research report to see why you should think twice about including TDY in your portfolio.
One Stock to Watch:
Leidos (LDOS)
One-Month Return: +10.6%
Formed through the split of IT services company SAIC, Leidos (NYSE:LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.
Why Do We Like LDOS?
- Backlog has averaged 15.7% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
- Operating margin improvement of 3.4 percentage points over the last five years demonstrates its ability to scale efficiently
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
Leidos’s stock price of $197.45 implies a valuation ratio of 17.7x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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Don’t let fear keep you from great opportunities and take a look at 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).
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