The stocks featured in this article have all approached their 52-week highs. When these price levels hit, it typically signals strong business execution, positive market sentiment, or significant industry tailwinds.

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 overhyped stocks that may correct and some you should consider instead.

Topgolf Callaway (MODG)

One-Month Return: +2.2%

Formed between the merger of Callaway and Topgolf, Topgolf Callaway (NYSE: MODG) sells golf equipment and operates technology-driven golf entertainment venues.

Why Are We Out on MODG?

1. Weak constant currency growth over the past two years indicates challenges in maintaining its market share
2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 15.3% annually
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Topgolf Callaway’s stock price of $9.72 implies a valuation ratio of 3.7x forward EV-to-EBITDA. To fully understand why you should be careful with MODG, check out our full research report (it’s free for active Edge members).

Donaldson (DCI)

One-Month Return: -0.1%

Playing a vital role in the historic Apollo 11 mission, Donaldson (NYSE: DCI) manufacturers and sells filtration equipment for various industries.

Why Are We Cautious About DCI?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Projected sales growth of 3.2% for the next 12 months suggests sluggish demand
3. Free cash flow margin shrank by 2.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

Donaldson is trading at $83.66 per share, or 21.2x forward P/E. Check out our free in-depth research report to learn more about why DCI doesn’t pass our bar.

C.H. Robinson Worldwide (CHRW)

One-Month Return: +15.9%

Engaging in contracts with tens of thousands of transportation companies, C.H. Robinson (NASDAQ: CHRW) offers freight transportation and logistics services.

Why Does CHRW Fall Short?

1. Annual sales declines of 5.4% for the past two years show its products and services struggled to connect with the market during this cycle
2. High input costs result in an inferior gross margin of 7.4% that must be offset through higher volumes
3. Waning returns on capital imply its previous profit engines are losing steam

At $148.63 per share, C.H. Robinson Worldwide trades at 26.3x forward P/E. Read our free research report to see why you should think twice about including CHRW in your portfolio.

Stocks We Like More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 9 Market-Beating Stocks. 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 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

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