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.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. All that said, here are three overhyped stocks that may correct and some you should consider instead.
Estée Lauder (EL)
One-Month Return: +15.5%
Named after its founder, who was an entrepreneurial woman from New York with a passion for skincare, Estée Lauder (NYSE: EL) is a one-stop beauty shop with products in skincare, fragrance, makeup, sun protection, and men’s grooming.
Why Does EL Fall Short?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Operating profits fell over the last year as its sales dropped and it struggled to adjust its fixed costs
- Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 40.8% annually, worse than its revenue
Estée Lauder’s stock price of $100.79 implies a valuation ratio of 48.5x forward P/E. Dive into our free research report to see why there are better opportunities than EL.
Figs (FIGS)
One-Month Return: +16.4%
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 Avoid FIGS?
- Performance surrounding its active customers has lagged its peers
- Projected 2.7 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $8 per share, Figs trades at 141.6x forward P/E. Check out our free in-depth research report to learn more about why FIGS doesn’t pass our bar.
Privia Health (PRVA)
One-Month Return: +13.5%
Operating in 13 states and the District of Columbia with over 4,300 providers serving more than 4.8 million patients, Privia Health (NASDAQ: PRVA) is a technology-driven company that helps physicians optimize their practices, improve patient experiences, and transition to value-based care models.
Why Are We Wary of PRVA?
- Modest revenue base of $1.9 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Low free cash flow margin of 4.3% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Negative returns on capital show that some of its growth strategies have backfired
Privia Health is trading at $25.99 per share, or 27.8x forward P/E. Read our free research report to see why you should think twice about including PRVA in your portfolio.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
