Each stock in this article is trading near its 52-week high. These elevated prices usually indicate some degree of investor confidence, business improvements, or favorable market conditions.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. On that note, here are three overhyped stocks that may correct and some you should consider instead.
Five Below (FIVE)
One-Month Return: +22.6%
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 Wary of FIVE?
- Subscale operations are evident in its revenue base of $4.43 billion, meaning it has fewer distribution channels than its larger rivals
- 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 decreasing returns suggest its historical profit centers are aging
At $181.92 per share, Five Below trades at 30.8x forward P/E. Check out our free in-depth research report to learn more about why FIVE doesn’t pass our bar.
Figs (FIGS)
One-Month Return: +25.9%
Rising to fame via TikTok and founded in 2013 by Heather Hasson and Trina Spear, Figs (NYSE:FIGS) is a healthcare apparel company known for its stylish approach to medical attire and uniforms.
Why Do We Pass on FIGS?
- Sluggish trends in its active customers suggest customers aren’t adopting its solutions as quickly as the company hoped
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 6.4% for the last two years
- Improving returns on capital suggest management is identifying more profitable investments
Figs’s stock price of $11.74 implies a valuation ratio of 110x forward P/E. If you’re considering FIGS for your portfolio, see our FREE research report to learn more.
Voya Financial (VOYA)
One-Month Return: +7.5%
Originally spun off from Dutch financial giant ING in 2013 and rebranded with a name suggesting "voyage," Voya Financial (NYSE:VOYA) provides workplace benefits and savings solutions to U.S. employers, helping their employees achieve better financial outcomes through retirement plans and insurance products.
Why Does VOYA Fall Short?
- Sales trends were unexciting over the last two years as its 6.8% annual growth was below the typical financials company
- Annual earnings per share growth of 4.1% underperformed its revenue over the last two years, showing its incremental sales were less profitable
- Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 14.6% annually over the last five years
Voya Financial is trading at $74.48 per share, or 7.8x forward P/E. To fully understand why you should be careful with VOYA, check out our full research report (it’s free for active Edge members).
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 Exlservice (+354% 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.