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. All that said, here are three overhyped stocks that may correct and some you should consider instead.

Five Below (FIVE)

One-Month Return: +54.5%

Often facilitating a treasure hunt shopping experience, Five Below (NASDAQ: FIVE) is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.

Why Is FIVE Not Exciting?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Modest revenue base of $3.88 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
3. Underwhelming 10.4% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam

Five Below is trading at $105.19 per share, or 20.9x forward P/E. Read our free research report to see why you should think twice about including FIVE in your portfolio.

Zurn Elkay (ZWS)

One-Month Return: +26.4%

Claiming to have saved more than 30 billion gallons of water, Zurn Elkay (NYSE: ZWS) provides water management solutions to various industries.

Why Are We Cautious About ZWS?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Estimated sales growth of 3.5% for the next 12 months implies demand will slow from its two-year trend
3. Issuance of new shares over the last five years caused its earnings per share to fall by 8.2% annually, even worse than its revenue declines

At $37.54 per share, Zurn Elkay trades at 27.6x forward P/E. If you’re considering ZWS for your portfolio, see our FREE research report to learn more.

Perma-Fix (PESI)

One-Month Return: +17.8%

Tackling hazardous waste challenges since 1990, Perma-Fix (NASDAQ: PESI) provides environmental waste treatment services.

Why Is PESI Risky?

1. Sales tumbled by 7.3% annually over the last five years, showing market trends are working against its favor during this cycle
2. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

Perma-Fix’s stock price of $9.61 implies a valuation ratio of 91.3x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than PESI.

Stocks We Like More

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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.