Exciting developments are taking place for the stocks in this article. They’ve all surged ahead of the broader market over the last month as catalysts such as new products and positive media coverage have propelled their returns.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. On that note, here are three stocks that are likely overheated and some you should look into instead.
Boot Barn (BOOT)
One-Month Return: +40.1%
With a strong store presence in Texas, California, Florida, and Oklahoma, Boot Barn (NYSE:BOOT) is a western-inspired apparel and footwear retailer.
Why Are We Cautious About BOOT?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Subscale operations are evident in its revenue base of $1.91 billion, meaning it has fewer distribution channels than its larger rivals
- Free cash flow margin dropped by 7.1 percentage points over the last year, implying the company became more capital intensive as competition picked up
Boot Barn’s stock price of $164.84 implies a valuation ratio of 26.5x forward P/E. If you’re considering BOOT for your portfolio, see our FREE research report to learn more.
Dine Brands (DIN)
One-Month Return: +9.6%
Operating a franchise model, Dine Brands (NYSE:DIN) is a casual restaurant chain that owns the Applebee’s and IHOP banners.
Why Are We Out on DIN?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
- Performance over the past six years shows each sale was less profitable, as its earnings per share fell by 10.1% annually
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Dine Brands is trading at $24.60 per share, or 4.8x forward P/E. Dive into our free research report to see why there are better opportunities than DIN.
Helios (HLIO)
One-Month Return: +3.9%
Founded on the principle of treating others as one wants to be treated, Helios (NYSE:HLIO) designs, manufactures, and sells motion and electronic control components for various sectors.
Why Should You Dump HLIO?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Projected sales decline of 1.6% over the next 12 months indicates demand will continue deteriorating
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 2.3% annually while its revenue grew
At $32.72 per share, Helios trades at 14.2x forward P/E. Check out our free in-depth research report to learn more about why HLIO doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free.