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.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. Keeping that in mind, here are three overhyped stocks that may correct and some you should consider instead.
Applied Materials (AMAT)
One-Month Return: +12.4%
Founded in 1967 as the first company to develop tools for other businesses in the semiconductor industry, Applied Materials (NASDAQ: AMAT) is the largest provider of semiconductor wafer fabrication equipment.
Why Does AMAT Fall Short?
- Projected sales decline of 2.2% for the next 12 months points to a tough demand environment ahead
At $225.35 per share, Applied Materials trades at 25x forward P/E. Read our free research report to see why you should think twice about including AMAT in your portfolio.
Elanco (ELAN)
One-Month Return: +12.6%
Originally established as a division of pharmaceutical giant Eli Lilly before becoming independent in 2018, Elanco Animal Health (NYSE: ELAN) develops and sells medications, vaccines, and other health products for pets and farm animals across more than 90 countries.
Why Are We Cautious About ELAN?
- Sales trends were unexciting over the last two years as its 1.8% annual growth was below the typical healthcare company
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Negative returns on capital show management lost money while trying to expand the business
Elanco is trading at $21.42 per share, or 23.5x forward P/E. Dive into our free research report to see why there are better opportunities than ELAN.
BNY (BK)
One-Month Return: -2.5%
Tracing its roots back to 1784 when it was founded by Alexander Hamilton, BNY (NYSE: BK) is a global financial institution that provides asset servicing, wealth management, and investment services to institutions, corporations, and high-net-worth individuals.
Why Do We Think Twice About BK?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 3.4% for the last five years
- Sizable asset base leads to capital growth challenges as its 6.3% annual tangible book value per share increases over the last five years fell short of other financials companies
- Underwhelming 8.9% return on equity reflects management’s difficulties in finding profitable growth opportunities
BNY’s stock price of $106.75 implies a valuation ratio of 13.4x forward P/E. To fully understand why you should be careful with BK, check out our full research report (it’s free for active Edge members).
Stocks We Like More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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
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