Each stock in this article is trading near its 52-week high. These elevated prices usually indicate some degree of investor confidence, business improvements, or favorable market conditions.
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.
Analog Devices (ADI)
One-Month Return: +10.3%
Founded by two MIT graduates, Ray Stata and Matthew Lorber in 1965, Analog Devices (NASDAQ:ADI) is one of the largest providers of high performance analog integrated circuits used mainly in industrial end markets, along with communications, autos, and consumer devices.
Why Does ADI Fall Short?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 10.1% annually over the last two years
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 7 percentage points
- ROIC of 6.5% reflects management’s challenges in identifying attractive investment opportunities, and its decreasing returns suggest its historical profit centers are aging
Analog Devices is trading at $254.57 per share, or 30.1x forward P/E. To fully understand why you should be careful with ADI, check out our full research report (it’s free).
Frontdoor (FTDR)
One-Month Return: +2.6%
Established in 2018 as a spin-off from ServiceMaster Global Holdings, Frontdoor (NASDAQ:FTDR) is a provider of home warranty and service plans.
Why Are We Wary of FTDR?
- Sales trends were unexciting over the last five years as its 6.8% annual growth was below the typical consumer discretionary company
- Performance surrounding its home service plans has lagged its peers
- Projected sales growth of 8.5% for the next 12 months suggests sluggish demand
Frontdoor’s stock price of $60.05 implies a valuation ratio of 16.6x forward P/E. If you’re considering FTDR for your portfolio, see our FREE research report to learn more.
Old Republic International (ORI)
One-Month Return: +10.1%
Founded during the Roaring Twenties in 1923 and weathering nearly a century of economic cycles, Old Republic International (NYSE:ORI) is a diversified insurance holding company that provides property, liability, title, and mortgage guaranty insurance through its various subsidiaries.
Why Does ORI Give Us Pause?
- Sluggish 5.2% annualized growth in net premiums earned over the last five years indicates the firm trailed its insurance peers
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 9.5% annually
- 8.2% annual book value per share growth over the last two years was slower than its insurance peers
At $39.58 per share, Old Republic International trades at 1.5x forward P/B. To fully understand why you should be careful with ORI, check out our full research report (it’s free).
Stocks We Like More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound 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 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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