3 Inflated Stocks That Fall Short

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. On that note, here are three overhyped stocks that may correct and some you should consider instead.

Laureate Education (LAUR)

One-Month Return: +3%

Founded in 1998 by Douglas L. Becker and based in Miami, Laureate Education (NASDAQ:LAUR) is a global network of higher education institutions.

Why Do We Avoid LAUR?

1. Sluggish trends in its enrolled students suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Earnings per share fell by 9% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Poor free cash flow margin of 14.1% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

Laureate Education’s stock price of $34.31 implies a valuation ratio of 17.5x forward P/E. If you’re considering LAUR for your portfolio, see our FREE research report to learn more.

Butterfield Bank (NTB)

One-Month Return: +4.3%

Founded in 1784 as one of the oldest banks in the Western Hemisphere, Butterfield Bank (NYSE:NTB) provides banking, wealth management, and trust services to individuals and businesses in select offshore financial centers including Bermuda, Cayman Islands, and the Channel Islands.

Why Are We Hesitant About NTB?

1. 1.6% annual revenue growth over the last two years was slower than its banking peers
2. Projected net interest income decline of 43.1% for the next 12 months points to a tough demand environment ahead
3. Net interest margin of 2.7% is well below other banks, signaling its loans aren’t very profitable

Butterfield Bank is trading at $51.84 per share, or 1.9x forward P/B. Read our free research report to see why you should think twice about including NTB in your portfolio.

Darling Ingredients (DAR)

One-Month Return: +20.9%

Turning what others consider waste into valuable resources, Darling Ingredients (NYSE:DAR) collects and transforms animal by-products, used cooking oil, and other bio-nutrients into valuable ingredients for food, feed, fuel, and industrial applications.

Why Does DAR Give Us Pause?

1. Products aren't resonating with the market as its revenue declined by 1.3% annually over the last three years
2. Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 23.5% that must be offset through higher volumes
3. Sales were less profitable over the last three years as its earnings per share fell by 42.7% annually, worse than its revenue declines

At $45.52 per share, Darling Ingredients trades at 21.4x forward P/E. To fully understand why you should be careful with DAR, check out our full research report (it’s free).

Stocks We Like More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.