Exciting developments are taking place for the stocks in this article. They’ve all surged ahead of the broader market over the last month as catalysts such as new products and positive media coverage have propelled their returns.
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.
Monro (MNRO)
One-Month Return: +20.3%
Started as a single location in Rochester, New York, Monro (NASDAQ: MNRO) provides common auto services such as brake repairs, tire replacements, and oil changes.
Why Do We Steer Clear of MNRO?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Subscale operations are evident in its revenue base of $1.20 billion, meaning it has fewer distribution channels than its larger rivals
- Earnings per share have contracted by 24.4% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
Monro’s stock price of $15.38 implies a valuation ratio of 19x forward P/E. To fully understand why you should be careful with MNRO, check out our full research report (it’s free).
Rocket Lab (RKLB)
One-Month Return: +20.8%
Becoming the first private company in the Southern Hemisphere to reach space, Rocket Lab (NASDAQ: RKLB) offers rockets designed for launching small satellites.
Why Does RKLB Worry Us?
- Historically negative EPS casts doubt for cautious investors and clouds its long-term earnings prospects
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $26.36 per share, Rocket Lab trades at 21.3x forward price-to-sales. Read our free research report to see why you should think twice about including RKLB in your portfolio.
Kratos (KTOS)
One-Month Return: +22%
Established with a commitment to supporting national security, Kratos (NASDAQ: KTOS) is a provider of advanced engineering, technology, and security solutions tailored for critical national security applications.
Why Are We Hesitant About KTOS?
- 7 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased 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
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Kratos is trading at $41.22 per share, or 75.9x forward P/E. Dive into our free research report to see why there are better opportunities than KTOS.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
