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.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. Keeping that in mind, here are three stocks that are likely overheated and some you should look into instead.
Live Nation (LYV)
One-Month Return: -0.5%
Owner of Ticketmaster and operator of music festival EDC, Live Nation (NYSE:LYV) is a company specializing in live event promotion, venue management, and ticketing services for concerts and shows.
Why Do We Avoid LYV?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 5.1% over the last two years was below our standards for the consumer discretionary sector
- Poor expense management has led to an operating margin of 3.6% that is below the industry average
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 1.8 percentage points
Live Nation is trading at $179.93 per share, or 128.7x forward P/E. To fully understand why you should be careful with LYV, check out our full research report (it’s free).
Neogen (NEOG)
One-Month Return: +13.6%
Founded in 1981 and operating at the intersection of food safety and animal health, Neogen (NASDAQ:NEOG) develops and manufactures diagnostic tests and related products to detect dangerous substances in food and pharmaceuticals for animal health.
Why Are We Bearish on NEOG?
- Annual sales declines of 3% for the past two years show its products and services struggled to connect with the market during this cycle
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- High net-debt-to-EBITDA ratio of 6× could force the company to raise capital on unfavorable terms if market conditions deteriorate
Neogen’s stock price of $11.38 implies a valuation ratio of 38.3x forward P/E. If you’re considering NEOG for your portfolio, see our FREE research report to learn more.
Trustmark (TRMK)
One-Month Return: +2.4%
Tracing its roots back to 1889 in Mississippi, Trustmark (NASDAQ:TRMK) is a financial services organization providing banking, wealth management, insurance, and mortgage services across five southeastern states.
Why Does TRMK Give Us Pause?
- Annual net interest income growth of 8.6% over the last five years was below our standards for the banking sector
- Estimated net interest income growth of 4.1% for the next 12 months implies demand will slow from its five-year trend
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 3.9% annually
At $47.69 per share, Trustmark trades at 1.3x forward P/B. Read our free research report to see why you should think twice about including TRMK in your portfolio.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.