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3 Inflated Stocks with Questionable Fundamentals

By: StockStory
May 19, 2025 at 00:40 AM EDT

WSM Cover Image

The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to new product launches, positive news, or even a dedicated social media following.

While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. On that note, here are three stocks getting more buzz than they deserve and some you should buy instead.

Williams-Sonoma (WSM)

One-Month Return: +26.1%

Started in 1956 as a store specializing in French cookware, Williams-Sonoma (NYSE: WSM) is a specialty retailer of higher-end kitchenware, home goods, and furniture.

Why Are We Wary of WSM?

  1. Recent store closures and weak same-store sales point to soft demand and an operational restructuring
  2. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
  3. 4.8 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position

Williams-Sonoma is trading at $173.84 per share, or 20.3x forward P/E. To fully understand why you should be careful with WSM, check out our full research report (it’s free).

Janus (JBI)

One-Month Return: +40.4%

Standing out with its digital keyless entry into self-storage room technology, Janus (NYSE: JBI) is a provider of easily accessible self-storage solutions.

Why Should You Sell JBI?

  1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
  2. Forecasted revenue decline of 4.9% for the upcoming 12 months implies demand will fall even further
  3. Incremental sales over the last four years were much less profitable as its earnings per share fell by 15.3% annually while its revenue grew

At $8.86 per share, Janus trades at 6.6x forward EV-to-EBITDA. If you’re considering JBI for your portfolio, see our FREE research report to learn more.

Knight-Swift Transportation (KNX)

One-Month Return: +17.3%

Covering 1.6 billion loaded miles in 2023 alone, Knight-Swift Transportation (NYSE: KNX) offers less-than-truckload and full truckload delivery services.

Why Should You Dump KNX?

  1. Sales trends were unexciting over the last two years as its 1.2% annual growth was below the typical industrials company
  2. Free cash flow margin shrank by 9.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
  3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Knight-Swift Transportation’s stock price of $45.32 implies a valuation ratio of 23.3x forward P/E. Dive into our free research report to see why there are better opportunities than KNX.

Stocks We Like More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

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

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