3 Inflated Stocks with Warning Signs

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.

While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. All that said, here are three overhyped stocks that may correct and some you should consider instead.

Nature's Sunshine (NATR)

One-Month Return: +10.5%

Started on a kitchen table in Utah, Nature’s Sunshine (NASDAQ:NATR) manufactures and sells nutritional and personal care products.

Why Are We Wary of NATR?

1. Lackluster 2.8% annual revenue growth over the last three years indicates the company is losing ground to competitors
2. Revenue base of $474.5 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Anticipated sales growth of 3.1% for the next year implies demand will be shaky

Nature's Sunshine’s stock price of $26.42 implies a valuation ratio of 28.8x forward P/E. Dive into our free research report to see why there are better opportunities than NATR.

Generac (GNRC)

One-Month Return: +41%

With its name deriving from a combination of “generating” and “AC”, Generac (NYSE:GNRC) offers generators and other power products for residential, industrial, and commercial use.

Why Does GNRC Give Us Pause?

1. Annual revenue growth of 2.3% over the last two years was below our standards for the industrials sector
2. Performance over the past five years shows its incremental sales were less profitable as its earnings per share were flat
3. Waning returns on capital imply its previous profit engines are losing steam

At $228.46 per share, Generac trades at 27.8x forward P/E. Check out our free in-depth research report to learn more about why GNRC doesn’t pass our bar.

Aflac (AFL)

One-Month Return: +3.8%

Known for its iconic duck mascot that has quacked "Aflac!" in commercials since 2000, Aflac (NYSE:AFL) provides supplemental health and life insurance policies that pay cash benefits directly to policyholders for expenses not covered by their primary insurance.

Why Do We Avoid AFL?

1. Insurance offerings face significant market challenges this cycle as net premiums earned contracted by 6.2% annually over the last five years
2. Expenses have increased as a percentage of revenue over the last two years as its combined ratio degraded by 10.8 percentage points
3. Estimated book value per share decline of 2.6% for the next 12 months implies a challenging profitability environment

Aflac is trading at $113.37 per share, or 2x forward P/B. Read our free research report to see why you should think twice about including AFL in your portfolio.

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