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.

However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. On that note, here are three stocks that are likely overheated and some you should look into instead.

Academy Sports (ASO)

One-Month Return: 0%

Founded in 1938 as a tire shop before expanding into fishing equipment, Academy Sports & Outdoor (NASDAQ: ASO) sells a broad selection of sporting goods but is still known for its outdoor activity merchandise.

Why Is ASO Not Exciting?

1. Products aren't resonating with the market as its revenue declined by 2.4% annually over the last three years
2. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
3. Free cash flow margin shrank by 3.9 percentage points over the last year, suggesting the company is consuming more capital to stay competitive

Academy Sports is trading at $59.11 per share, or 9.6x forward P/E. Dive into our free research report to see why there are better opportunities than ASO.

Saia (SAIA)

One-Month Return: -4%

Pivoting its business model after realizing there was more success in delivering produce than selling it, Saia (NASDAQ: SAIA) is a provider of freight transportation solutions.

Why Are We Cautious About SAIA?

1. Disappointing tons shipped over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
2. Lacking free cash flow margin got worse over the last five years as its investment needs accelerated
3. Eroding returns on capital suggest its historical profit centers are aging

At $398.84 per share, Saia trades at 39.1x forward P/E. Read our free research report to see why you should think twice about including SAIA in your portfolio.

MasTec (MTZ)

One-Month Return: +13.3%

Involved in the 1996 Olympic Games MasTec (NYSE: MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.

Why Does MTZ Give Us Pause?

1. Gross margin of 12.7% is below its competitors, leaving less money to invest in areas like marketing and R&D
2. Poor expense management has led to an operating margin of 3% that is below the industry average
3. 5.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

MasTec’s stock price of $293.63 implies a valuation ratio of 35.8x forward P/E. Check out our free in-depth research report to learn more about why MTZ doesn’t pass our bar.

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