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.

However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. On that note, here are three stocks that are likely overheated and some you should look into instead.

Couchbase (BASE)

One-Month Return: -1.2%

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 Are We Wary of BASE?

1. Average billings growth of 6.6% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
2. Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
3. Negative free cash flow raises questions about the return timeline for its investments

Couchbase’s stock price of $24.29 implies a valuation ratio of 5.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than BASE.

Academy Sports (ASO)

One-Month Return: +24%

Founded in 1938 as a tire shop before expanding into fishing equipment, Academy Sports & Outdoor (NASDAQ: ASO) sells a broad selection of sporting goods but is still known for its outdoor activity merchandise.

Why Does ASO Give Us Pause?

1. Muted 3.8% annual revenue growth over the last six years shows its demand lagged behind its consumer retail peers
2. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
3. Capital intensity has ramped up over the last year as its free cash flow margin decreased by 3.4 percentage points

Academy Sports is trading at $54.56 per share, or 8.9x forward P/E. Read our free research report to see why you should think twice about including ASO in your portfolio.

Carnival (CCL)

One-Month Return: +23%

Boasting outrageous amenities like a planetarium on board its ships, Carnival (NYSE: CCL) is one of the world's largest leisure travel companies and a prominent player in the cruise industry.

Why Are We Cautious About CCL?

1. Estimated sales growth of 4% for the next 12 months implies demand will slow from its two-year trend
2. Low free cash flow margin of 8.9% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Push for growth has led to negative returns on capital, signaling value destruction

At $29.57 per share, Carnival trades at 14.8x forward P/E. Check out our free in-depth research report to learn more about why CCL doesn’t pass our bar.

Stocks We Like More

Trump’s April 2024 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound 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 183% over the last five years (as of March 31st 2025).

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. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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