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.

However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. Keeping that in mind, here are three overhyped stocks that may correct and some you should consider instead.

IPG Photonics (IPGP)

One-Month Return: +16.6%

Both a designer and manufacturer of its products, IPG Photonics (NASDAQ: IPGP) is a provider of high-performance fiber lasers used for cutting, welding, and processing raw materials.

Why Do We Think IPGP Will Underperform?

1. Annual sales declines of 5.3% for the past five years show its products and services struggled to connect with the market during this cycle
2. Overall productivity fell over the last five years as its plummeting sales were accompanied by a decline in its operating margin
3. Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable

IPG Photonics’s stock price of $64.23 implies a valuation ratio of 40.6x forward P/E. To fully understand why you should be careful with IPGP, check out our full research report (it’s free).

Soho House (SHCO)

One-Month Return: +14.2%

Boasting fancy locations in hubs such as NYC and Miami, Soho House (NYSE: SHCO) is a global hospitality brand offering exclusive private member clubs, hotels, and restaurants.

Why Does SHCO Fall Short?

1. Number of members has disappointed over the past two years, indicating weak demand for its offerings
2. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
3. 16× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Soho House is trading at $6.21 per share, or 6.8x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SHCO doesn’t pass our bar.

Frontdoor (FTDR)

One-Month Return: +32.6%

Established in 2018 as a spin-off from ServiceMaster Global Holdings, Frontdoor (NASDAQ: FTDR) is a provider of home warranty and service plans.

Why Does FTDR Worry Us?

1. Performance surrounding its home service plans has lagged its peers
2. Free cash flow margin is forecasted to shrink by 2.4 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
3. Waning returns on capital imply its previous profit engines are losing steam

At $53.70 per share, Frontdoor trades at 17.6x forward P/E. Read our free research report to see why you should think twice about including FTDR in your portfolio.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.