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.

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

Soho House (SHCO)

One-Month Return: +39.9%

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 Worry Us?

1. Sluggish trends in its members suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Negative free cash flow raises questions about the return timeline for its investments
3. 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

Soho House is trading at $8.83 per share, or 9.6x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than SHCO.

Offerpad (OPAD)

One-Month Return: +301%

Known for giving homeowners cash offers within 24 hours, Offerpad (NYSE: OPAD) operates a tech-enabled platform specializing in direct home buying and selling solutions.

Why Should You Sell OPAD?

1. Sluggish trends in its homes purchased suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Unprofitable operations could lead to additional rounds of dilutive equity financing if the credit window closes

At $4.89 per share, Offerpad trades at 0.2x forward price-to-sales. Check out our free in-depth research report to learn more about why OPAD doesn’t pass our bar.

Astec (ASTE)

One-Month Return: +25.5%

Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ: ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.

Why Do We Think Twice About ASTE?

1. Demand cratered as it couldn’t win new orders over the past two years, leading to an average 28.2% decline in its backlog
2. Gross margin of 23.8% reflects its high production costs
3. Poor free cash flow margin of -0.9% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

Astec’s stock price of $47.57 implies a valuation ratio of 17.9x forward P/E. If you’re considering ASTE for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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-small-cap company Exlservice (+354% 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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