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.

While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. On that note, here are three stocks that are likely overheated and some you should look into instead.

Acushnet (GOLF)

One-Month Return: +16.4%

Producer of the acclaimed Titleist Pro V1 golf ball, Acushnet (NYSE: GOLF) is a design and manufacturing company specializing in performance-driven golf products.

Why Do We Steer Clear of GOLF?

1. Muted 10.1% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Acushnet’s stock price of $101.55 implies a valuation ratio of 25.3x forward P/E. Check out our free in-depth research report to learn more about why GOLF doesn’t pass our bar.

Toll Brothers (TOL)

One-Month Return: +5.3%

Started by two brothers who started by building and selling just one home in Pennsylvania, today Toll Brothers (NYSE: TOL) is a luxury homebuilder across the United States.

Why Does TOL Worry Us?

1. Backlog has dropped by 8.5% on average over the past two years, suggesting it’s losing orders as competition picks up
2. Estimated sales decline of 4.8% for the next 12 months implies a challenging demand environment
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.6 percentage points

At $153.15 per share, Toll Brothers trades at 11.7x forward P/E. If you’re considering TOL for your portfolio, see our FREE research report to learn more.

Merchants Bancorp (MBIN)

One-Month Return: +21.2%

With a strategic focus on low-risk, government-backed lending programs, Merchants Bancorp (NASDAQCM:MBIN) is an Indiana-based bank holding company specializing in multi-family mortgage banking, mortgage warehousing, and traditional banking services.

Why Do We Think Twice About MBIN?

1. Net interest margin of 2.9% reflects its high servicing and capital costs
2. Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
3. Insufficient tier one capital ratio of 9.2% leaves little margin for error in meeting regulatory liquidity requirements

Merchants Bancorp is trading at $43.49 per share, or 0.9x forward P/B. Dive into our free research report to see why there are better opportunities than MBIN.

Stocks We Like More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.