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. All that said, here are three overhyped stocks that may correct and some you should consider instead.

Zumiez (ZUMZ)

One-Month Return: +19.1%

With store associates called “Zumiez Stash Members”, Zumiez (NASDAQ: ZUMZ) is a specialty retailer of street and skate apparel, footwear, and accessories.

Why Should You Dump ZUMZ?

1. Store closures demonstrate a defensive approach to eliminating underperforming locations
2. Suboptimal cost structure is highlighted by its history of operating margin losses
3. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term

At $28.66 per share, Zumiez trades at 31.6x forward P/E. Check out our free in-depth research report to learn more about why ZUMZ doesn’t pass our bar.

DXC (DXC)

One-Month Return: +20.2%

Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE: DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations.

Why Do We Pass on DXC?

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. Earnings per share were flat over the last five years and fell short of the peer group average
3. ROIC of 1.2% reflects management’s challenges in identifying attractive investment opportunities, and its shrinking returns suggest its past profit sources are losing steam

DXC is trading at $15.35 per share, or 5x forward P/E. Read our free research report to see why you should think twice about including DXC in your portfolio.

Affirm (AFRM)

One-Month Return: +14.1%

Founded by PayPal co-founder Max Levchin with a mission to create honest financial products, Affirm (NASDAQ: AFRM) provides a payment network that allows consumers to make purchases and pay for them over time with transparent, flexible installment loans.

Why Does AFRM Fall Short?

1. Negative return on equity shows management lost money while trying to expand the business
2. 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Affirm’s stock price of $76.31 implies a valuation ratio of 23.3x forward P/E. Dive into our free research report to see why there are better opportunities than AFRM.

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 6 Stocks for this week. 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.