Each stock in this article is trading near its 52-week high. These elevated prices usually indicate some degree of investor confidence, business improvements, or favorable market conditions.
However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. All that said, here are three stocks getting more buzz than they deserve and some you should buy instead.
Boyd Gaming (BYD)
One-Month Return: +2.2%
Run by the Boyd family, Boyd Gaming (NYSE: BYD) is a diversified operator of gaming entertainment properties across the United States, offering casino games, hotel accommodations, and dining.
Why Should You Sell BYD?
- Sales trends were unexciting over the last two years as its 4.6% annual growth was below the typical consumer discretionary company
- Sales are projected to tank by 12% over the next 12 months as demand evaporates
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Boyd Gaming’s stock price of $87.50 implies a valuation ratio of 13.1x forward P/E. Check out our free in-depth research report to learn more about why BYD doesn’t pass our bar.
Monarch (MCRI)
One-Month Return: +2.4%
Established in 1993, Monarch (NASDAQ: MCRI) operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.
Why Does MCRI Give Us Pause?
- 4% annual revenue growth over the last two years was slower than its consumer discretionary peers
- Anticipated sales growth of 4.5% for the next year implies demand will be shaky
At $105.11 per share, Monarch trades at 21x forward P/E. To fully understand why you should be careful with MCRI, check out our full research report (it’s free).
Gorman-Rupp (GRC)
One-Month Return: +7.8%
Powering fluid dynamics since 1934, Gorman-Rupp (NYSE: GRC) has evolved from its Ohio origins into a global manufacturer and seller of pumps and pump systems.
Why Do We Think Twice About GRC?
- Annual revenue growth of 3.3% over the last two years was below our standards for the industrials sector
- Anticipated sales growth of 3.7% for the next year implies demand will be shaky
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 4.7 percentage points
Gorman-Rupp is trading at $45.46 per share, or 20.4x forward P/E. If you’re considering GRC for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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