The stocks in this article are all trading near their 52-week highs. This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance.

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.

Qualys (QLYS)

One-Month Return: +20.2%

Originally developed to address the growing complexity of IT security in the cloud era, Qualys (NASDAQ: QLYS) provides a cloud-based platform that helps organizations identify, manage, and protect their IT assets from cyber threats across on-premises, cloud, and mobile environments.

Why Are We Cautious About QLYS?

1. Underwhelming ARR growth of 10.1% over the last year suggests the company faced challenges in acquiring and retaining long-term customers
2. Estimated sales growth of 8% for the next 12 months implies demand will slow from its two-year trend
3. Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage

At $153.78 per share, Qualys trades at 7.9x forward price-to-sales. Check out our free in-depth research report to learn more about why QLYS doesn’t pass our bar.

Kellanova (K)

One-Month Return: +0.6%

With Corn Flakes as its first and most iconic product, Kellanova (NYSE: K) is a packaged foods company that is dominant in the cereal and snack categories.

Why Does K Worry Us?

1. Flat unit sales over the past two years imply it may need to invest in product improvements to get back on track
2. Anticipated sales growth of 2.4% for the next year implies demand will be shaky
3. Earnings per share fell by 3.5% annually over the last three years while its revenue was flat, partly because it diluted shareholders

Kellanova’s stock price of $83.32 implies a valuation ratio of 22.5x forward P/E. If you’re considering K for your portfolio, see our FREE research report to learn more.

Affiliated Managers Group (AMG)

One-Month Return: +8.8%

Using a partnership approach that preserves entrepreneurial culture at its portfolio companies, Affiliated Managers Group (NYSE: AMG) is an investment firm that acquires stakes in boutique asset management companies while allowing them to maintain operational independence.

Why Are We Wary of AMG?

1. Annual sales declines of 1.3% for the past two years show its products and services struggled to connect with the market during this cycle
2. Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 7.8% annually

Affiliated Managers Group is trading at $257.65 per share, or 8.8x forward P/E. To fully understand why you should be careful with AMG, check out our full research report (it’s free for active Edge members).

Stocks We Like More

Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.

Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. 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-small-cap company Comfort Systems (+782% 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

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