1 Momentum Stock for Long-Term Investors and 2 Facing Headwinds

Exciting developments are taking place for the stocks in this article. They’ve all surged ahead of the broader market over the last month as catalysts such as new products and positive media coverage have propelled their returns.

But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. All that said, here is one stock we think lives up to the hype and two not so much.

One-Month Return: +20.4%

Aiming to address a high-stakes and often confusing decision, eHealth (NASDAQ:EHTH) guides consumers through health insurance enrollment and related topics.

Why Are We Cautious About EHTH?

1. Struggled with new customer acquisition as its estimated membership averaged 2.2% declines

2. Sales are projected to tank by 2.5% over the next 12 months as demand evaporates

3. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value

At $4.54 per share, eHealth trades at 3.6x forward EV/EBITDA. Read our free research report to see why you should think twice about including EHTH in your portfolio, it’s free for active Edge members.

One-Month Return: +19.4%

Operating a massive network spanning 20,000 miles of fiber optic cable and connecting to over 3,200 buildings worldwide, Cogent Communications (NASDAQ:CCOI) provides high-speed Internet access, private network services, and data center colocation to businesses and bandwidth-intensive organizations across 54 countries.

Why Does CCOI Give Us Pause?

1. Free cash flow margin shrank by 39.7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

2. Waning returns on capital imply its previous profit engines are losing steam

3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Cogent is trading at $42.17 per share, or 6.1x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than CCOI.

One-Month Return: +32.1%

Founded in the basement of a Boise, Idaho dental office in 1978, Micron (NYSE:MU) is a leading provider of memory chips used in thousands of devices across mobile, data centers, industrial, consumer, and automotive markets.

Why Do We Like MU?

1. Market share has increased this cycle as its 55.1% annual revenue growth over the last two years was exceptional

2. Notable projected revenue growth of 44.2% for the next 12 months hints at market share gains

3. Earnings per share grew by 24% annually over the last five years and easily exceeded the peer group average