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.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. On that note, here are three stocks that are likely overheated and some you should look into instead.
Best Buy (BBY)
One-Month Return: +8.3%
With humble beginnings as a stereo equipment seller, Best Buy (NYSE:BBY) now sells a broad selection of consumer electronics, appliances, and home office products.
Why Is BBY Risky?
- Ongoing store closures and lackluster same-store sales indicate sluggish demand and a focus on consolidation
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Gross margin of 22.6% is below its competitors, leaving less money for marketing and promotions
Best Buy’s stock price of $93 implies a valuation ratio of 13.4x forward P/E. Read our free research report to see why you should think twice about including BBY in your portfolio.
Dime Community Bancshares (DCOM)
One-Month Return: +0.8%
With roots dating back to 1910 and a name that evokes the historic "dime savings banks" of America's past, Dime Community Bancshares (NASDAQ:DCOM) is a New York-based bank holding company that provides commercial banking and financial services to businesses and consumers throughout Greater Long Island.
Why Does DCOM Give Us Pause?
- Net interest margin of 3% reflects its high servicing and capital costs
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 2.2% annually while its revenue grew
- Annual tangible book value per share growth of 6.5% over the last two years was below our standards for the banking sector
Dime Community Bancshares is trading at $40.75 per share, or 1.2x forward P/B. Dive into our free research report to see why there are better opportunities than DCOM.
ExxonMobil (XOM)
One-Month Return: -1.1%
One of the successor companies to John D. Rockefeller's Standard Oil monopoly that was broken up in 1911, ExxonMobil (NYSE:XOM) explores for and produces crude oil and natural gas, refines and sells petroleum products, and manufactures petrochemicals.
Why Does XOM Worry Us?
- Gross margin of 43.9% reflects its high production costs and unfavorable asset base
- Expenses have increased as a percentage of revenue over the last five years as its EBITDA margin fell by 1.3 percentage points
At $163.28 per share, ExxonMobil trades at 13.1x forward P/E. If you’re considering XOM for your portfolio, see our FREE research report to learn more.
Stocks We Like More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.