3 Hyped Up Stocks We're Skeptical Of

Great things are happening to the stocks in this article. They’re all outperforming the market over the last month because of positive catalysts such as a new product line, constructive news flow, or even a loyal Reddit fanbase.

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 getting more buzz than they deserve and some you should buy instead.

CarGurus (CARG)

One-Month Return: +20.4%

Bringing transparency to a sometimes opaque process, CarGurus (NASDAQ:CARG) is a digital marketplace where auto dealers can connect with potential customers and where car buyers can browse, purchase, and obtain financing.

Why Are We Wary of CARG?

1. Products and services have few die-hard fans as sales have declined by 15.1% annually over the last three years
2. Modest 1.7% annual growth in paying dealers over the last two years indicates potential challenges in customer acquisition and retention
3. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.4%

At $35.70 per share, CarGurus trades at 11.4x forward EV/EBITDA. Check out our free in-depth research report to learn more about why CARG doesn’t pass our bar.

Herc (HRI)

One-Month Return: +22.4%

Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE:HRI) provides equipment rental and related services to a wide range of industries.

Why Does HRI Worry Us?

1. Incremental sales over the last two years were much less profitable as its earnings per share fell by 3.4% annually while its revenue grew
2. Free cash flow margin shrank by 13.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Herc’s stock price of $135.93 implies a valuation ratio of 11.2x forward P/E. If you’re considering HRI for your portfolio, see our FREE research report to learn more.

LifeStance Health Group (LFST)

One-Month Return: +23.2%

With over 6,600 licensed mental health professionals treating more than 880,000 patients annually, LifeStance Health (NASDAQ:LFST) provides outpatient mental health services through a network of clinicians offering psychiatric evaluations, psychological testing, and therapy across 33 states.

Why Is LFST Not Exciting?

1. Smaller revenue base of $1.32 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
2. Poor free cash flow margin of -0.8% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
3. Push for growth has led to negative returns on capital, signaling value destruction

LifeStance Health Group is trading at $5.63 per share, or 33.5x forward P/E. To fully understand why you should be careful with LFST, check out our full research report (it’s free).

Stocks We Like More

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at 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 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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