The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to some combination of positive news, upbeat results, or supportive macro developments. As such, investors are taking notice and bidding up shares.
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.
Custom Truck One Source (CTOS)
One-Month Return: +33.5%
Inspired by a family gas station, Custom Truck One Source (NYSE:CTOS) is a distributor of trucks and heavy equipment.
Why Do We Think CTOS Will Underperform?
- Muted 2.1% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Issuance of new shares over the last five years caused its earnings per share to fall by 6.8% annually while its revenue grew
- Free cash flow margin dropped by 6.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Custom Truck One Source is trading at $8.43 per share, or 104.6x forward P/E. If you’re considering CTOS for your portfolio, see our FREE research report to learn more.
Alta (ALTG)
One-Month Return: +24.4%
Founded in 1984, Alta Equipment Group (NYSE:ALTG) is a provider of industrial and construction equipment and services across the Midwest and Northeast United States.
Why Should You Sell ALTG?
- Annual sales declines of 1.1% for the past two years show its products and services struggled to connect with the market during this cycle
- Cash-burning history makes us doubt the long-term viability of its business model
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Alta’s stock price of $6.89 implies a valuation ratio of 6.1x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why ALTG doesn’t pass our bar.
Zebra (ZBRA)
One-Month Return: +10.8%
Taking its name from the black and white stripes of barcodes, Zebra Technologies (NASDAQ:ZBRA) provides barcode scanners, mobile computers, RFID systems, and other data capture technologies that help businesses track assets and optimize operations.
Why Are We Cautious About ZBRA?
- 3.9% annual revenue growth over the last five years was slower than its business services peers
- Earnings per share lagged its peers over the last five years as they only grew by 4.3% annually
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $228.06 per share, Zebra trades at 13.2x forward P/E. To fully understand why you should be careful with ZBRA, check out our full research report (it’s free).
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 for 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.