3 Hyped Up Stocks with Questionable Fundamentals

Exciting developments are taking place for the stocks in this article. They’ve all surged ahead of the broader market over the last month as catalysts such as new products and positive media coverage have propelled their returns.

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

onsemi (ON)

One-Month Return: +11.2%

Spun out of Motorola in 1999 and built through a series of acquisitions, onsemi (NASDAQ:ON) is a global provider of analog chips specializing in autos, industrial applications, and power management in cloud data centers.

Why Does ON Give Us Pause?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 10.6% annually over the last two years
2. Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 13.4% for the last two years

onsemi’s stock price of $59.93 implies a valuation ratio of 21.8x forward P/E. Dive into our free research report to see why there are better opportunities than ON.

Dollar Tree (DLTR)

One-Month Return: +11.1%

A treasure hunt because there’s no guarantee of consistent product selection, Dollar Tree (NASDAQ:DLTR) is a discount retailer that sells general merchandise and select packaged food at extremely low prices.

Why Are We Wary of DLTR?

1. Sizable revenue base leads to growth challenges as its 1.1% annual revenue increases over the last six years fell short of other consumer retail companies
2. Sales are projected to tank by 21.7% over the next 12 months as demand evaporates
3. Underwhelming 9.8% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging

Dollar Tree is trading at $109.95 per share, or 20.3x forward P/E. Check out our free in-depth research report to learn more about why DLTR doesn’t pass our bar.

ArcBest (ARCB)

One-Month Return: +18.7%

Historically owning furniture, banking, and other subsidiaries, ArcBest (NASDAQ:ARCB) offers full-truckload, less-than-truckload, and intermodal deliveries of freight.

Why Do We Think ARCB Will Underperform?

1. Declining unit sales over the past two years imply it may need to invest in improvements to get back on track
2. Earnings per share have contracted by 32.9% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $82.23 per share, ArcBest trades at 12.9x forward P/E. Read our free research report to see why you should think twice about including ARCB in your portfolio.

High-Quality Stocks for All Market Conditions

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out 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 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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