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3 Overvalued Stocks in Hot Water

TPC Cover Image

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.

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 stocks getting more buzz than they deserve and some you should buy instead.

Tutor Perini (TPC)

One-Month Return: +64.8%

Known for constructing the Philadelphia Eagles’ Stadium, Tutor Perini (NYSE: TPC) is a civil and building construction company offering diversified general contracting and design-build services.

Why Are We Hesitant About TPC?

  1. Sales were flat over the last five years, indicating it’s failed to expand this cycle
  2. Gross margin of 6.1% reflects its high production costs
  3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Tutor Perini’s stock price of $35.95 implies a valuation ratio of 17.2x forward P/E. Read our free research report to see why you should think twice about including TPC in your portfolio.

Proto Labs (PRLB)

One-Month Return: +21.3%

Pioneering the concept of online quoting and manufacturing for custom prototypes and low-volume production parts, Proto Labs (NYSE: PRLB) offers injection molding, 3D printing, and sheet metal fabrication for manufacturers in various industries.

Why Do We Pass on PRLB?

  1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
  2. Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 7.3 percentage points
  3. Earnings per share have dipped by 10.4% annually over the past five years, which is concerning because stock prices follow EPS over the long term

At $41.36 per share, Proto Labs trades at 28x forward P/E. To fully understand why you should be careful with PRLB, check out our full research report (it’s free).

ScanSource (SCSC)

One-Month Return: +35.2%

Operating as a crucial link in the technology supply chain since 1992, ScanSource (NASDAQ: SCSC) is a hybrid distributor that connects hardware, software, and cloud services from technology suppliers to resellers and business customers.

Why Do We Think SCSC Will Underperform?

  1. Sales tumbled by 1.5% annually over the last five years, showing market trends are working against its favor during this cycle
  2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
  3. Low returns on capital reflect management’s struggle to allocate funds effectively

ScanSource is trading at $42.06 per share, or 11.3x forward P/E. Dive into our free research report to see why there are better opportunities than SCSC.

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 176% over the last five years.

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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.

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