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. All that said, here are three stocks getting more buzz than they deserve and some you should buy instead.
Zoom (ZM)
One-Month Return: +6.1%
Once the verb that defined remote work during the pandemic ("let's Zoom later"), Zoom (NASDAQ:ZM) provides a cloud-based platform for video meetings, phone calls, team chat, and collaboration tools that helps businesses and individuals connect virtually.
Why Should You Dump ZM?
- Average billings growth of 3.9% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Customers have churned over the last year due to the commoditized nature of its software, as reflected in its 98% net revenue retention rate
- Anticipated sales growth of 3.6% for the next year implies demand will be shaky
At $92.07 per share, Zoom trades at 5.8x forward price-to-sales. If you’re considering ZM for your portfolio, see our FREE research report to learn more.
Semtech (SMTC)
One-Month Return: +11.1%
A public company since the late 1960s, Semtech (NASDAQ:SMTC) is a provider of analog and mixed-signal semiconductors used for Internet of Things systems and cloud connectivity.
Why Are We Out on SMTC?
- Mounting operating losses demonstrate the tradeoff between growth and profitability
- Low free cash flow margin of 9.3% declined over the last five years as its investments ramped, giving it little breathing room
- Negative returns on capital show that some of its growth strategies have backfired, and its shrinking returns suggest its past profit sources are losing steam
Semtech is trading at $88.54 per share, or 44.7x forward P/E. Check out our free in-depth research report to learn more about why SMTC doesn’t pass our bar.
Kennametal (KMT)
One-Month Return: +36.4%
Involved in manufacturing hard tips of anti-tank projectiles in World War II, Kennametal (NYSE:KMT) is a provider of industrial materials and tools for various sectors.
Why Do We Steer Clear of KMT?
- Sales tumbled by 1.1% annually over the last two years, showing market trends are working against its favor during this cycle
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Earnings per share lagged its peers over the last two years as they only grew by 1.9% annually
Kennametal’s stock price of $41.92 implies a valuation ratio of 16.8x forward P/E. Dive into our free research report to see why there are better opportunities than KMT.
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Strong Momentum 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.