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 overhyped stocks that may correct and some you should consider instead.
Tri Pointe Homes (TPH)
One-Month Return: +32.3%
Established in 2009 in California, Tri Pointe Homes (NYSE:TPH) is a United States homebuilder recognized for its innovative and sustainable approach to creating premium, life-enhancing homes.
Why Are We Out on TPH?
- Backlog has dropped by 38.5% on average over the past two years, suggesting it’s losing orders as competition picks up
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 7.5% annually, worse than its revenue
Tri Pointe Homes is trading at $46.55 per share, or 17x forward P/E. Dive into our free research report to see why there are better opportunities than TPH.
Exact Sciences (EXAS)
One-Month Return: +0.5%
With a mission to detect cancer earlier when it's more treatable, Exact Sciences (NASDAQ:EXAS) develops and markets cancer screening and diagnostic tests, including its flagship Cologuard stool-based colorectal cancer screening test.
Why Are We Cautious About EXAS?
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Negative returns on capital show that some of its growth strategies have backfired, and its falling returns suggest its earlier profit pools are drying up
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $102.92 per share, Exact Sciences trades at 87.2x forward P/E. If you’re considering EXAS for your portfolio, see our FREE research report to learn more.
Selective Insurance Group (SIGI)
One-Month Return: +5.5%
Founded in 1926 during the early days of automobile insurance, Selective Insurance Group (NASDAQ:SIGI) is a property and casualty insurance company that sells commercial, personal, and excess and surplus lines insurance products through independent agents.
Why Do We Think Twice About SIGI?
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 12.1% annually
- Capital trends were unexciting over the last five years as its 6% annual book value per share growth was below the typical insurance firm
- ROE of 11.4% reflects management’s challenges in identifying attractive investment opportunities
Selective Insurance Group’s stock price of $86.42 implies a valuation ratio of 1.4x forward P/B. Read our free research report to see why you should think twice about including SIGI in your portfolio.
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 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.