The stocks featured in this article have all approached their 52-week highs. When these price levels hit, it typically signals strong business execution, positive market sentiment, or significant industry tailwinds.
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 stocks that are likely overheated and some you should look into instead.
Herbalife (HLF)
One-Month Return: +6.7%
With the first products sold out of the trunk of the founder’s car, Herbalife (NYSE:HLF) today offers a portfolio of shakes, supplements, personal care products, and weight management programs to help customers reach their nutritional and fitness goals.
Why Does HLF Worry Us?
- Shrinking unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
- Anticipated sales growth of 2.9% for the next year implies demand will be shaky
- Performance over the past three years was negatively impacted by new share issuances as its earnings per share dropped by 15.9% annually, worse than its revenue
Herbalife is trading at $15.90 per share, or 5.9x forward P/E. Dive into our free research report to see why there are better opportunities than HLF.
WESCO (WCC)
One-Month Return: +6.9%
Based in Pittsburgh, WESCO (NYSE:WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management.
Why Does WCC Fall Short?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Earnings per share have dipped by 11.2% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Poor free cash flow margin of 1.6% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
WESCO’s stock price of $276.65 implies a valuation ratio of 17.6x forward P/E. To fully understand why you should be careful with WCC, check out our full research report (it’s free).
IBM (IBM)
One-Month Return: +0.1%
With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE:IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.
Why Do We Think Twice About IBM?
- Annual sales growth of 1.3% over the last five years lagged behind its business services peers as its large revenue base made it difficult to generate incremental demand
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 4.2% annually
At $309.07 per share, IBM trades at 25.1x forward P/E. If you’re considering IBM for your portfolio, see our FREE research report to learn more.
Stocks We Like More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.