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.
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 overhyped stocks that may correct and some you should consider instead.
Vontier (VNT)
One-Month Return: -0.2%
A spin-off of a spin-off, Vontier (NYSE: VNT) provides electronic products and systems to the transportation, automotive, and manufacturing sectors.
Why Do We Think VNT Will Underperform?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Free cash flow margin shrank by 7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Waning returns on capital imply its previous profit engines are losing steam
Vontier’s stock price of $43.05 implies a valuation ratio of 12.9x forward P/E. Dive into our free research report to see why there are better opportunities than VNT.
Mettler-Toledo (MTD)
One-Month Return: +7.9%
With roots dating back to the precision balance innovations of Swiss engineer Erhard Mettler, Mettler-Toledo (NYSE: MTD) manufactures precision weighing instruments, analytical equipment, and product inspection systems used in laboratories, industrial settings, and food retail.
Why Does MTD 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
- Estimated sales growth of 4.6% for the next 12 months is soft and implies weaker demand
- Overall productivity fell over the last two years as its plummeting sales were accompanied by a decline in its adjusted operating margin
At $1,357 per share, Mettler-Toledo trades at 30.8x forward P/E. To fully understand why you should be careful with MTD, check out our full research report (it’s free for active Edge members).
Elanco (ELAN)
One-Month Return: +15.6%
Originally established as a division of pharmaceutical giant Eli Lilly before becoming independent in 2018, Elanco Animal Health (NYSE: ELAN) develops and sells medications, vaccines, and other health products for pets and farm animals across more than 90 countries.
Why Do We Think Twice About ELAN?
- Sales trends were unexciting over the last two years as its 1.8% annual growth was below the typical healthcare company
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Negative returns on capital show that some of its growth strategies have backfired
Elanco is trading at $22 per share, or 23.8x forward P/E. If you’re considering ELAN for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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 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 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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