The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to new product launches, positive news, or even a dedicated social media following.
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.
Couchbase (BASE)
One-Month Return: +26.9%
Formed in 2011 with the merger of Membase and CouchOne, Couchbase (NASDAQ: BASE) is a database-as-a-service platform that allows enterprises to store large volumes of semi-structured data.
Why Does BASE Fall Short?
- 19.2% annual revenue growth over the last three years was slower than its software peers
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Historical operating losses point to an inefficient cost structure
Couchbase’s stock price of $18.62 implies a valuation ratio of 4.3x forward price-to-sales. Check out our free in-depth research report to learn more about why BASE doesn’t pass our bar.
Alta (ALTG)
One-Month Return: +32.4%
Founded in 1984, Alta Equipment Group (NYSE: ALTG) is a provider of industrial and construction equipment and services across the Midwest and Northeast United States.
Why Do We Think ALTG Will Underperform?
- 5.8% annual revenue growth over the last two years was slower than its industrials peers
- Negative free cash flow raises questions about the return timeline for its investments
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Alta is trading at $5.43 per share, or 1x forward EV-to-EBITDA. If you’re considering ALTG for your portfolio, see our FREE research report to learn more.
Enpro (NPO)
One-Month Return: +34.4%
Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE: NPO) designs, manufactures, and sells products used for machinery in various industries.
Why Are We Cautious About NPO?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.1% annually over the last five years
- Earnings per share have dipped by 2.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Underwhelming 6.7% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $184.70 per share, Enpro trades at 23.9x forward P/E. Dive into our free research report to see why there are better opportunities than NPO.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
