Great things are happening to the stocks in this article. They’re all outperforming the market over the last month because of positive catalysts such as a new product line, constructive news flow, or even a loyal Reddit fanbase.

While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. Keeping that in mind, here are three stocks that are likely overheated and some you should look into instead.

Lovesac (LOVE)

One-Month Return: +43.3%

Known for its oversized, premium beanbags, Lovesac (NASDAQ: LOVE) is a specialty furniture brand selling modular furniture.

Why Do We Pass on LOVE?

1. Muted 16.8% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
2. Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 2.5 percentage points
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Lovesac’s stock price of $15.23 implies a valuation ratio of 8.7x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than LOVE.

MYR Group (MYRG)

One-Month Return: +21.8%

Constructing electrical and phone lines in the American Midwest dating back to the 1890s, MYR Group (NASDAQ: MYRG) is a specialty contractor in the electrical construction industry.

Why Does MYRG Fall Short?

1. Backlog growth averaged a weak 5.4% over the past two years, suggesting it may need to tweak its product roadmap or go-to-market strategy
2. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 10.8%
3. Eroding returns on capital suggest its historical profit centers are aging

MYR Group is trading at $318.17 per share, or 34.1x forward P/E. Check out our free in-depth research report to learn more about why MYRG doesn’t pass our bar.

Iridium (IRDM)

One-Month Return: +37.1%

With a constellation of 66 low-earth orbit satellites providing coverage to every inch of the planet, Iridium Communications (NASDAQ: IRDM) operates a global satellite network that provides voice and data services to customers in remote areas where traditional telecommunications are unavailable.

Why Do We Think Twice About IRDM?

1. Muted 5% annual revenue growth over the last two years shows its demand lagged behind its business services peers
2. Estimated sales growth of 1.7% for the next 12 months implies demand will slow from its two-year trend
3. Free cash flow margin shrank by 7.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

At $34.09 per share, Iridium trades at 29.3x forward P/E. To fully understand why you should be careful with IRDM, check out our full research report (it’s free).

Stocks We Like More

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.

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.