3 Inflated Stocks with Open Questions

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.

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

Scholastic (SCHL)

One-Month Return: +24.5%

Creator of the legendary Scholastic Book Fair, Scholastic (NASDAQ:SCHL) is an international company specializing in children's publishing, education, and media services.

Why Do We Pass on SCHL?

1. 4.9% annual revenue growth over the last five years was slower than its consumer discretionary peers
2. Low free cash flow margin of 1% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

At $34.38 per share, Scholastic trades at 23.5x forward P/E. Read our free research report to see why you should think twice about including SCHL in your portfolio.

Bel Fuse (BELFA)

One-Month Return: +20.7%

Founded by 26-year-old Elliot Bernstein during the electronics boom after WW2, Bel Fuse (NASDAQ:BELF.A) provides electronic systems and devices to the telecommunications, networking, transportation, and industrial sectors.

Why Are We Wary of BELFA?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 1.5% annually over the last two years
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term

Bel Fuse’s stock price of $186.74 implies a valuation ratio of 28.5x forward P/E. To fully understand why you should be careful with BELFA, check out our full research report (it’s free).

Centene (CNC)

One-Month Return: +12.2%

Serving nearly 1 in 15 Americans through its government healthcare programs, Centene (NYSE:CNC) is a healthcare company that manages government-sponsored health insurance programs like Medicaid and Medicare for low-income and complex-needs populations.

Why Are We Hesitant About CNC?

1. Customer additions have disappointed over the past two years, indicating the company’s value proposition may not be resonating
2. Earnings per share fell by 5.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Centene is trading at $44.83 per share, or 19x forward P/E. If you’re considering CNC for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

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 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.