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華爾街日報3 Hyped Up Stocks We Approach with Caution
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.
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 that are likely overheated and some you should look into instead.
Five Below (FIVE)
One-Month Return: +15.7%
Often facilitating a treasure hunt shopping experience, Five Below (NASDAQ:FIVE) is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.
Why Are We Hesitant About FIVE?
- Revenue base of $4.43 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 35.4% that must be offset through higher volumes
- Underwhelming 10.4% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
At $182.02 per share, Five Below trades at 31.4x forward P/E. If you’re considering FIVE for your portfolio, see our FREE research report to learn more.
Malibu Boats (MBUU)
One-Month Return: +8.7%
Founded in California in 1982, Malibu Boats (NASDAQ:MBUU) is a manufacturer of high-performance sports boats and luxury watercrafts.
Why Are We Out on MBUU?
- Demand for its offerings was relatively low as its number of boats sold has underwhelmed
- Poor free cash flow margin of 6.2% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Malibu Boats’s stock price of $29.44 implies a valuation ratio of 22x forward P/E. Check out our free in-depth research report to learn more about why MBUU doesn’t pass our bar.
Cogent (CCOI)
One-Month Return: +26.9%
Operating a massive network spanning 20,000 miles of fiber optic cable and connecting to over 3,200 buildings worldwide, Cogent Communications (NASDAQ:CCOI) provides high-speed Internet access, private network services, and data center colocation to businesses and bandwidth-intensive organizations across 54 countries.
Why Does CCOI Fall Short?
- Number of total connections has disappointed over the past two years, indicating weak demand for its offerings
- Waning returns on capital imply its previous profit engines are losing steam
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Cogent is trading at $21.78 per share, or 10x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than CCOI.
Stocks We Like More
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-small-cap company Comfort Systems (+782% 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.