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.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. All that said, here are three stocks that are likely overheated and some you should look into instead.
nLIGHT (LASR)
One-Month Return: +22.4%
Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ: LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.
Why Should You Sell LASR?
- Annual revenue growth of 2.6% over the last five years was below our standards for the industrials sector
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 7.9 percentage points
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
nLIGHT is trading at $36.08 per share, or 144.3x forward P/E. If you’re considering LASR for your portfolio, see our FREE research report to learn more.
Olaplex (OLPX)
One-Month Return: +24.6%
Rising to fame on TikTok because of its “bond building" hair products, Olaplex (NASDAQ: OLPX) offers products and treatments that repair the damage caused by traditional heat and chemical-based styling goods.
Why Are We Hesitant About OLPX?
- Annual sales declines of 17.3% for the past three years show its products struggled to connect with the market
- Sales were less profitable over the last three years as its earnings per share fell by 50.8% annually, worse than its revenue declines
- Free cash flow margin dropped by 14.7 percentage points over the last year, implying the company became more capital intensive as competition picked up
At $1.27 per share, Olaplex trades at 14x forward P/E. Dive into our free research report to see why there are better opportunities than OLPX.
Apogee (APOG)
One-Month Return: +19.4%
Involved in the design of the Apple Store on Fifth Avenue in New York City, Apogee (NASDAQ: APOG) sells architectural products and services such as high-performance glass for commercial buildings.
Why Do We Steer Clear of APOG?
- Sales tumbled by 1.3% annually over the last two years, showing market trends are working against its favor during this cycle
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1%
- Earnings per share have contracted by 8.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
Apogee’s stock price of $40.02 implies a valuation ratio of 10x forward P/E. Read our free research report to see why you should think twice about including APOG in your portfolio.
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged 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 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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