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. On that note, here are three overhyped stocks that may correct and some you should consider instead.
Teladoc (TDOC)
One-Month Return: +30.9%
Founded to help people in rural areas get online medical consultations, Teladoc Health (NYSE: TDOC) is a telemedicine platform that facilitates remote doctor’s visits.
Why Are We Wary of TDOC?
- Sales stagnated over the last three years and signal the need for new growth strategies
- Focus on expanding its platform came at the expense of monetization as its average revenue per user fell by 9% annually
- Estimated sales for the next 12 months are flat and imply a softer demand environment
Teladoc is trading at $9.27 per share, or 6.7x forward EV/EBITDA. Check out our free in-depth research report to learn more about why TDOC doesn’t pass our bar.
Tennant (TNC)
One-Month Return: +3.5%
As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE: TNC) designs, manufactures, and sells cleaning products to various sectors.
Why Do We Think TNC Will Underperform?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.5% annually over the last two years
- Sales were less profitable over the last two years as its earnings per share fell by 23.9% annually, worse than its revenue declines
- Eroding returns on capital suggest its historical profit centers are aging
Tennant’s stock price of $88.32 implies a valuation ratio of 15.3x forward P/E. Dive into our free research report to see why there are better opportunities than TNC.
Merchants Bancorp (MBIN)
One-Month Return: -0.6%
With a strategic focus on low-risk, government-backed lending programs, Merchants Bancorp (NASDAQCM:MBIN) is an Indiana-based bank holding company specializing in multi-family mortgage banking, mortgage warehousing, and traditional banking services.
Why Do We Think Twice About MBIN?
- Muted 7.4% annual revenue growth over the last two years shows its demand lagged behind its banking peers
- Costs have risen faster than its revenue over the last five years, causing its efficiency ratio to worsen by 18.3 percentage points
- Low tier one capital ratio of 9.3% indicates the company may struggle to maintain adequate liquidity during periods of economic stress
At $47.87 per share, Merchants Bancorp trades at 1.1x forward P/B. To fully understand why you should be careful with MBIN, check out our full research report (it’s free).
Stocks We Like More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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 Kadant (+351% five-year return). Find your next big winner with StockStory today.
