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.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. On that note, here are three overhyped stocks that may correct and some you should consider instead.
Hyatt Hotels (H)
One-Month Return: -1.2%
Founded in 1957, Hyatt Hotels (NYSE: H) is a global hospitality company with a portfolio of 20 premier brands and over 950 properties across 65 countries.
Why Do We Think H Will Underperform?
- Revenue per room has disappointed over the past two years due to weaker trends in its daily rates and occupancy levels
- Operating margin of 4.8% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 5.1% for the last two years
At $164.33 per share, Hyatt Hotels trades at 51.2x forward P/E. Dive into our free research report to see why there are better opportunities than H.
Sphere Entertainment (SPHR)
One-Month Return: +14.8%
Famous for its viral Las Vegas Sphere venue, Sphere Entertainment (NYSE: SPHR) hosts live entertainment events and distributes content across various media platforms.
Why Do We Pass on SPHR?
- Muted 8.5% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Low free cash flow margin of 1.9% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Improving returns on capital suggest management is identifying more profitable investments
Sphere Entertainment’s stock price of $93.91 implies a valuation ratio of 14.1x forward EV-to-EBITDA. To fully understand why you should be careful with SPHR, check out our full research report (it’s free for active Edge members).
Elanco (ELAN)
One-Month Return: -5.2%
Originally established as a division of pharmaceutical giant Eli Lilly before becoming independent in 2018, Elanco Animal Health (NYSE: ELAN) develops and sells medications, vaccines, and other health products for pets and farm animals across more than 90 countries.
Why Is ELAN Not Exciting?
- Sales trends were unexciting over the last two years as its 2.5% annual growth was below the typical healthcare company
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Negative returns on capital show management lost money while trying to expand the business
Elanco is trading at $22.21 per share, or 23.2x forward P/E. If you’re considering ELAN for your portfolio, see our FREE research report to learn more.
Stocks We Like More
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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
