3 Inflated Stocks We Keep Off Our Radar

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.

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 that are likely overheated and some you should look into instead.

Walmart (WMT)

One-Month Return: +3.4%

Known for its large-format Supercenters, Walmart (NYSE:WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.

Why Are We Hesitant About WMT?

1. Sizable revenue base leads to growth challenges as its 5.4% annual revenue increases over the last three years fell short of other consumer retail companies
2. Gross margin of 24.8% is below its competitors, leaving less money for marketing and promotions
3. Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability

Walmart’s stock price of $116.36 implies a valuation ratio of 40.9x forward P/E. Check out our free in-depth research report to learn more about why WMT doesn’t pass our bar.

Somnigroup (SGI)

One-Month Return: -1.1%

Established through the merger of Tempur-Pedic and Sealy in 2012, Somnigroup (NYSE:SGI) is a bedding manufacturer known for its innovative memory foam mattresses and sleep products

Why Should You Dump SGI?

1. 14.3% annual revenue growth over the last five years was slower than its consumer discretionary peers
2. Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 1 percentage points over the next year
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Somnigroup is trading at $89.76 per share, or 28.5x forward P/E. If you’re considering SGI for your portfolio, see our FREE research report to learn more.

Columbia Banking System (COLB)

One-Month Return: +1.8%

Created through the merger of two Pacific Northwest banking institutions with deep regional roots, Columbia Banking System (NASDAQ:COLB) operates Umpqua Bank, providing commercial, consumer, and wealth management services across eight western states.

Why Do We Think COLB Will Underperform?

1. Muted 6.7% annual revenue growth over the last two years shows its demand lagged behind its banking peers
2. Performance over the past five years shows its incremental sales were less profitable, as its 2.3% annual earnings per share growth trailed its revenue gains
3. Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 1.4% annually over the last five years

At $28.97 per share, Columbia Banking System trades at 1x forward P/B. Dive into our free research report to see why there are better opportunities than COLB.

High-Quality Stocks for All Market Conditions

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our 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 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.