3 Inflated Stocks Walking a Fine Line

The stocks in this article are all trading near their 52-week highs. This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance.

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

Donaldson (DCI)

One-Month Return: +13.6%

Playing a vital role in the historic Apollo 11 mission, Donaldson (NYSE:DCI) manufacturers and sells filtration equipment for various industries.

Why Do We Think Twice About DCI?

1. Muted 4.2% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
2. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
3. Anticipated sales growth of 3.8% for the next year implies demand will be shaky

Donaldson’s stock price of $109.97 implies a valuation ratio of 3.4x forward price-to-sales. Read our free research report to see why you should think twice about including DCI in your portfolio.

Cummins (CMI)

One-Month Return: +4.5%

With more than half of the heavy-duty truck market using its engines at one point, Cummins (NYSE:CMI) offers engines and power systems.

Why Are We Hesitant About CMI?

1. Sales stagnated over the last two years and signal the need for new growth strategies
2. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 24.5%
3. Waning returns on capital imply its previous profit engines are losing steam

At $593 per share, Cummins trades at 22.7x forward P/E. Check out our free in-depth research report to learn more about why CMI doesn’t pass our bar.

Washington Trust Bancorp (WASH)

One-Month Return: +20.2%

Founded in 1800 and operating as Rhode Island's oldest community bank, Washington Trust Bancorp (NASDAQ:WASH) is a regional bank holding company offering commercial banking, mortgage lending, personal banking, and wealth management services.

Why Should You Sell WASH?

1. 3.7% annual net interest income growth over the last five years was slower than its banking peers
2. Net interest margin of 2.2% is well below other banks, signaling its loans aren’t very profitable
3. Sales over the last five years were less profitable as its earnings per share fell by 7.8% annually while its revenue was flat

Washington Trust Bancorp is trading at $35.55 per share, or 1.2x forward P/B. To fully understand why you should be careful with WASH, check out our full research report (it’s free).

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 5 Growth Stocks for this month. 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.