Great things are happening to the stocks in this article. They’re all outperforming the market over the last month because of positive catalysts such as a new product line, constructive news flow, or even a loyal Reddit fanbase.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. On that note, here are three stocks getting more buzz than they deserve and some you should buy instead.
Twilio (TWLO)
One-Month Return: +19.5%
Known for the clever "Twilio Magic" demo that had developers creating functioning communications apps in minutes, Twilio (NYSE: TWLO) provides a platform that enables businesses to communicate with their customers through voice, messaging, email, and other digital channels.
Why Are We Hesitant About TWLO?
- Average billings growth of 13.5% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Anticipated sales growth of 9.3% for the next year implies demand will be shaky
- Gross margin of 49.4% is way below its competitors, leaving less money to invest in areas like marketing and R&D
Twilio is trading at $128.47 per share, or 3.8x forward price-to-sales. Dive into our free research report to see why there are better opportunities than TWLO.
WeightWatchers (WW)
One-Month Return: +31.4%
Known by many for its old cable television commercials, WeightWatchers (NASDAQ: WW) is a wellness company offering a range of products and services promoting weight loss and healthy habits.
Why Are We Cautious About WW?
- Performance surrounding its members has lagged its peers
- Poor free cash flow margin of -0.8% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Eroding returns on capital suggest its historical profit centers are aging
WeightWatchers’s stock price of $34.32 implies a valuation ratio of 15.7x forward P/E. To fully understand why you should be careful with WW, check out our full research report (it’s free for active Edge members).
Hillenbrand (HI)
One-Month Return: +20.9%
Hillenbrand, Inc. (NYSE: HI) is an industrial company that designs, manufactures, and sells highly engineered processing equipment and solutions for various industries.
Why Should You Dump HI?
- 3.5% annual revenue growth over the last two years was slower than its industrials peers
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 18.9 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
At $31.44 per share, Hillenbrand trades at 13x forward P/E. Check out our free in-depth research report to learn more about why HI doesn’t pass our bar.
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.
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