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. Keeping that in mind, here are three stocks that are likely overheated and some you should look into instead.

Texas Instruments (TXN)

One-Month Return: +4.6%

Headquartered in Dallas, Texas since the 1950s, Texas Instruments (NASDAQ: TXN) is the world’s largest producer of analog semiconductors.

Why Does TXN Worry Us?

1. The company has faced growth challenges as its 3.6% annual revenue increases over the last five years fell short of other semiconductor companies
2. Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 15.3 percentage points
3. Free cash flow margin shrank by 10.4 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

At $323.40 per share, Texas Instruments trades at 39.2x forward P/E. Read our free research report to see why you should think twice about including TXN in your portfolio.

First Hawaiian Bank (FHB)

One-Month Return: +2.1%

Dating back to 1858 as Hawaii's oldest bank with deep roots in the Pacific island communities, First Hawaiian (NASDAQ: FHB) operates a full-service community bank providing deposit accounts, commercial and consumer loans, credit cards, and wealth management services across Hawaii, Guam, and Saipan.

Why Do We Avoid FHB?

1. Muted 5% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
2. Net interest margin of 3.1% is well below other banks, signaling its loans aren’t very profitable
3. 2.3% annual tangible book value per share growth over the last five years was slower than its banking peers

First Hawaiian Bank is trading at $27.93 per share, or 1.2x forward P/B. Dive into our free research report to see why there are better opportunities than FHB.

Cathay General Bancorp (CATY)

One-Month Return: +5.2%

Founded in 1962 with its first branch in Los Angeles' Chinatown, Cathay General Bancorp (NASDAQ: CATY) operates Cathay Bank, providing commercial banking services to businesses and individuals with a strong presence in Asian-American communities.

Why Are We Cautious About CATY?

1. 3.7% annual revenue growth over the last two years was slower than its banking peers
2. 6.5% annual net interest income growth over the last five years was slower than its banking peers
3. Performance over the past two years shows its incremental sales were less profitable, as its 1.1% annual earnings per share growth trailed its revenue gains

Cathay General Bancorp’s stock price of $60.27 implies a valuation ratio of 1.2x forward P/B. Check out our free in-depth research report to learn more about why CATY doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

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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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.