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.
Mayville Engineering (MEC)
One-Month Return: +14.2%
Originally founded solely on tool and die manufacturing, Mayville Engineering Company (NYSE:MEC) specializes in metal fabrication, tube bending, and welding to be used in various industries.
Why Are We Cautious About MEC?
- Annual sales declines of 3.1% for the past two years show its products and services struggled to connect with the market during this cycle
- Gross margin of 12.8% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Earnings per share have contracted by 52.4% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
Mayville Engineering’s stock price of $19.02 implies a valuation ratio of 81x forward P/E. Read our free research report to see why you should think twice about including MEC in your portfolio.
MasTec (MTZ)
One-Month Return: +15.4%
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 Fall Short?
- Gross margin of 12.9% reflects its high production costs
- Operating margin of 3.1% fell from an already low starting point over the last five years because it pursued growth instead of profits
- 4.2 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
At $228.12 per share, MasTec trades at 29x forward P/E. Check out our free in-depth research report to learn more about why MTZ doesn’t pass our bar.
Ally Financial (ALLY)
One-Month Return: +12.6%
Born from the former GMAC (General Motors Acceptance Corporation) and rebranded in 2010, Ally Financial (NYSE:ALLY) operates a digital-first bank offering auto financing, insurance, mortgage lending, and investment services to consumers and commercial clients.
Why Do We Avoid ALLY?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Sales over the last two years were less profitable as its earnings per share fell by 2.6% annually while its revenue was flat
- Low tier one capital ratio of 9.7% indicates the company may struggle to maintain adequate liquidity during periods of economic stress
Ally Financial is trading at $44.45 per share, or 8.7x forward P/E. If you’re considering ALLY for your portfolio, see our FREE research report to learn more.
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 9 Market-Beating Stocks. 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 Comfort Systems (+782% 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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