Exciting developments are taking place for the stocks in this article. They’ve all surged ahead of the broader market over the last month as catalysts such as new products and positive media coverage have propelled their returns.

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.

Sportsman's Warehouse (SPWH)

One-Month Return: +34.5%

A go-to destination for individuals passionate about hunting, fishing, camping, hiking, shooting sports, and more, Sportsman's Warehouse (NASDAQ: SPWH) is an American specialty retailer offering a diverse range of active gear, equipment, and apparel.

Why Are We Out on SPWH?

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. Historical operating margin losses point to an inefficient cost structure
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

At $3.47 per share, Sportsman's Warehouse trades at 3.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including SPWH in your portfolio.

BeautyHealth (SKIN)

One-Month Return: +36.5%

Operating in the emerging beauty health category, the appropriately named BeautyHealth (NASDAQ: SKIN) is a skincare company best known for its Hydrafacial product that cleanses and hydrates skin.

Why Should You Dump SKIN?

1. Annual revenue growth of 3.8% over the last three years was below our standards for the consumer staples sector
2. Suboptimal cost structure is highlighted by its history of operating margin losses
3. 10× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

BeautyHealth’s stock price of $2.28 implies a valuation ratio of 17.9x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SKIN doesn’t pass our bar.

MasterCraft (MCFT)

One-Month Return: +14.3%

Started by a waterskiing instructor, MasterCraft (NASDAQ: MCFT) specializes in designing, manufacturing, and selling sport boats.

Why Does MCFT Give Us Pause?

1. Performance surrounding its boats sold has lagged its peers
2. Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 9.2 percentage points over the next year
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

MasterCraft is trading at $19.97 per share, or 15.9x forward P/E. Dive into our free research report to see why there are better opportunities than MCFT.

High-Quality Stocks for All Market Conditions

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 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 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