2 surging stocks to keep an eye on and 1 facing challenges

The stocks featured in this article have all approached their 52-week highs. When these price levels hit, it typically signals strong business execution, positive market sentiment, or significant industry tailwinds.

However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. On that note, here are two stocks with lasting competitive advantages and one best left ignored.

One stock to sell:

Surgery Partners (SGRY)

One-month return: +61.1%

With more than 180 locations across 33 states serving as alternatives to traditional hospital settings, Surgery Partners (NASDAQ:SGRY) operates a national network of outpatient surgical facilities including ambulatory surgery centers and short-stay surgical hospitals.

Why Do We Think Twice About SGRY?

1. Weak unit sales over the past two years suggest it might have to lower prices to accelerate growth

2. Sales are projected to tank by 14.3% over the next 12 months as demand evaporates

3. High net-debt-to-EBITDA ratio of 7× could force the company to raise capital on unfavorable terms if market conditions deteriorate

At $23.21 per share, Surgery Partners trades at 97.5x forward P/E. Check out our free in-depth research report to learn more about why SGRY doesn't pass our bar .

Two stocks to watch:

SentinelOne (S)

One-month return: +2.7%

Built on the principle of "fighting machine with machine," SentinelOne (NYSE:S) provides an AI-powered cybersecurity platform that autonomously prevents, detects, and responds to threats across endpoints, cloud workloads, and identity systems.

Why Are We Positive on S?

1. ARR growth averaged 22.2% over the last year, showing customers are willing to take multi-year bets on its software

2. Forecasted revenue growth of 19.2% for the next 12 months indicates its momentum over the last two years is sustainable

3. Free cash flow margin is anticipated to expand by 9.4 percentage points over the next year, providing additional flexibility for investments and share buybacks/dividends

SentinelOne is trading at $23.94 per share, or 6.7x forward price-to-sales. Is now a good time to buy? See for yourself in our full research report, it's free .

Abercrombie and Fitch (ANF)

One-month return: +20.7%

Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE:ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults.

Why Should You Buy ANF?

1. Same-store sales growth averaged 5% over the past two years, showing it's bringing new and repeat shoppers into its stores

2. Differentiated product assortment results in a best-in-class gross margin of 63.2%

3. Share buybacks catapulted its annual earnings per share growth to 76.3%, which outperformed its revenue gains over the last three years