3 Overrated Stocks We Think Twice About

The stocks featured in this article have all approached their 52-week highs. When these price levels hit, it typically signals strong business execution, positive market sentiment, or significant industry tailwinds.

But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. On that note, here are three stocks getting more buzz than they deserve and some you should buy instead.

Steven Madden (SHOO)

One-Month Return: +16.4%

As seen in the infamous Wolf of Wall Street movie, Steven Madden (NASDAQ:SHOO) is a fashion brand famous for its trendy and innovative footwear, appealing to a young and style-conscious audience.

Why Is SHOO Risky?

1. Lackluster 13.2% annual revenue growth over the last five years indicates the company is losing ground to competitors
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $43.89 per share, Steven Madden trades at 21.1x forward P/E. Dive into our free research report to see why there are better opportunities than SHOO.

Compass (COMP)

One-Month Return: +17.2%

Fueled by its mission to replace the "paper-driven, antiquated workflow" of buying a house, Compass (NYSE:COMP) is a digital-first company operating a residential real estate brokerage in the United States.

Why Should You Sell COMP?

1. Number of principal agents has disappointed over the past two years, indicating weak demand for its offerings
2. Persistent operating margin losses suggest the business manages its expenses poorly
3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.9% for the last two years

Compass’s stock price of $10.31 implies a valuation ratio of 17.9x forward P/E. To fully understand why you should be careful with COMP, check out our full research report (it’s free for active Edge members).

ePlus (PLUS)

One-Month Return: +1.7%

Starting as a financing company in 1990 before evolving into a full-service technology provider, ePlus (NASDAQ:PLUS) provides comprehensive IT solutions, professional services, and financing options to help organizations optimize their technology infrastructure and supply chain processes.

Why Does PLUS Fall Short?

1. Sales were flat over the last two years, indicating it’s failed to expand this cycle
2. Sales are projected to tank by 2.1% over the next 12 months as demand evaporates further
3. Earnings per share have contracted by 5.5% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

ePlus is trading at $89.71 per share, or 20.4x forward P/E. Check out our free in-depth research report to learn more about why PLUS doesn’t pass our bar.

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 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-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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