Each stock in this article is trading near its 52-week high. These elevated prices usually indicate some degree of investor confidence, business improvements, or favorable market conditions.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. Keeping that in mind, here are three stocks that are likely overheated and some you should look into instead.
Moog (MOG.A)
One-Month Return: +7.6%
Responsible for the flight control actuation system integrated in the B-2 stealth bomber, Moog (NYSE: MOG.A) provides precision motion control solutions used in aerospace and defense applications
Why Does MOG.A Fall Short?
- Muted 4.9% annual revenue growth over the last five years shows its demand lagged behind its industrials peers
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6.6 percentage points
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Moog is trading at $243.67 per share, or 26.2x forward P/E. To fully understand why you should be careful with MOG.A, check out our full research report (it’s free for active Edge members).
Genco (GNK)
One-Month Return: -2.6%
Headquartered in NYC, Genco (NYSE: GNK) is a shipping company that transports dry bulk cargo along worldwide maritime routes.
Why Do We Think GNK Will Underperform?
- Demand for its offerings was relatively low as its number of owned vessels has underwhelmed
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 46.6% annually, worse than its revenue
- Free cash flow margin dropped by 23.4 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Genco’s stock price of $18.39 implies a valuation ratio of 12.3x forward P/E. If you’re considering GNK for your portfolio, see our FREE research report to learn more.
Radian Group (RDN)
One-Month Return: +0.9%
Founded during the housing boom of 1977 and weathering multiple real estate cycles since, Radian Group (NYSE: RDN) provides mortgage insurance and real estate services, helping lenders manage risk and homebuyers achieve affordable homeownership.
Why Are We Hesitant About RDN?
- Net premiums earned contracted by 3.2% annually over the last five years, showing unfavorable market dynamics this cycle
- Day-to-day expenses have swelled relative to revenue over the last two years as its combined ratio increased by 13.7 percentage points
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 2.2% annually
At $36.00 per share, Radian Group trades at 1x forward P/B. Check out our free in-depth research report to learn more about why RDN doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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-micro-cap company Kadant (+351% 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.
