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3 Overrated Stocks We Steer Clear Of
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 three stocks getting more buzz than they deserve and some you should buy instead.
nLIGHT (LASR)
One-Month Return: +12.4%
Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ:LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.
Why Should You Sell LASR?
- Annual revenue growth of 2.6% over the last five years was below our standards for the industrials sector
- Cash-burning history and the downward spiral in its margin profile make us wonder if it has a viable business model
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
nLIGHT is trading at $37.15 per share, or 141.2x forward P/E. Read our free research report to see why you should think twice about including LASR in your portfolio.
Charles River Laboratories (CRL)
One-Month Return: +13.3%
Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories (NYSE:CRL) provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.
Why Are We Hesitant About CRL?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $199.52 per share, Charles River Laboratories trades at 19.2x forward P/E. If you’re considering CRL for your portfolio, see our FREE research report to learn more.
Royalty Pharma (RPRX)
One-Month Return: -3.2%
Pioneering a unique business model in the pharmaceutical industry since 1996, Royalty Pharma (NASDAQ:RPRX) acquires rights to receive portions of sales from successful biopharmaceutical products, providing funding to drug developers without conducting research itself.
Why Is RPRX Not Exciting?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Modest revenue base of $2.35 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 4.4 percentage points
Royalty Pharma’s stock price of $38.64 implies a valuation ratio of 7.8x forward P/E. Check out our free in-depth research report to learn more about why RPRX doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.