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.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. Keeping that in mind, here are three stocks that are likely overheated and some you should look into instead.
Penguin Solutions (PENG)
One-Month Return: +23.5%
Based in the US, Penguin Solutions (NASDAQ: PENG) is a diversified semiconductor company offering memory, digital, and LED products.
Why Should You Sell PENG?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 5% annually over the last two years
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Underwhelming 5% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up
Penguin Solutions’s stock price of $24.47 implies a valuation ratio of 14.5x forward P/E. Check out our free in-depth research report to learn more about why PENG doesn’t pass our bar.
Kohl's (KSS)
One-Month Return: +38%
Founded as a corner grocery store in Milwaukee, Wisconsin, Kohl’s (NYSE: KSS) is a department store chain that sells clothing, cosmetics, electronics, and home goods.
Why Do We Steer Clear of KSS?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Sales are projected to tank by 5.2% over the next 12 months as its demand continues evaporating
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Kohl's is trading at $11.70 per share, or 44.4x forward P/E. Read our free research report to see why you should think twice about including KSS in your portfolio.
Figs (FIGS)
One-Month Return: +16.1%
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 Are We Cautious About FIGS?
- Demand for its offerings was relatively low as its number of active customers has underwhelmed
- Earnings per share have dipped annually over the past three years, which is concerning because stock prices follow EPS over the long term
- Negative returns on capital show management lost money while trying to expand the business
At $6.55 per share, Figs trades at 87x forward P/E. To fully understand why you should be careful with FIGS, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
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