Each stock in this article is trading near its 52-week high. These elevated prices usually indicate some degree of investor confidence, business improvements, or favorable market conditions.

But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. Keeping that in mind, here are three overhyped stocks that may correct and some you should consider instead.

General Dynamics (GD)

One-Month Return: +6.1%

Creator of the famous M1 Abrahms tank, General Dynamics (NYSE: GD) develops aerospace, marine systems, combat systems, and information technology products.

Why Do We Think Twice About GD?

1. New orders were hard to come by as its average backlog growth of 3.4% over the past two years underwhelmed
2. Estimated sales growth of 4% for the next 12 months implies demand will slow from its two-year trend
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 1.8 percentage points

At $354.85 per share, General Dynamics trades at 21.5x forward P/E. Read our free research report to see why you should think twice about including GD in your portfolio.

Assurant (AIZ)

One-Month Return: +3.7%

With roots dating back to 1892 when it was founded by a Civil War veteran, Assurant (NYSE: AIZ) provides specialized insurance products and services that protect major consumer purchases like mobile devices, vehicles, homes, and appliances.

Why Does AIZ Worry Us?

1. Sizable revenue base leads to growth challenges as its 5.1% annual revenue increases over the last five years fell short of other insurance companies
2. Outsized scale creates growth headwinds as its 4.7% annualized net premiums earned increases over the last five years underperformed other financial institutions
3. Annual book value per share growth of 2.4% over the last five years lagged behind its insurance peers as its large balance sheet made it difficult to generate incremental capital growth

Assurant is trading at $225.52 per share, or 1.9x forward P/B. To fully understand why you should be careful with AIZ, check out our full research report (it’s free for active Edge members).

Wells Fargo (WFC)

One-Month Return: +9.5%

Founded during the California Gold Rush in 1852 to provide banking and express delivery services to miners and merchants, Wells Fargo (NYSE: WFC) is a diversified financial services company that provides banking, lending, investment, and wealth management services to individuals and businesses.

Why Does WFC Fall Short?

1. Scale is a double-edged sword because it limits the firm’s growth potential compared to its smaller competitors, as reflected in its below-average annual net interest income increases of 2.8% for the last five years
2. Estimated net interest income growth of 5.3% for the next 12 months is soft and implies weaker demand
3. Net interest margin shrank by 45.3 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the profitability of its loan book is decreasing or the market is becoming more competitive

Wells Fargo’s stock price of $86.40 implies a valuation ratio of 1.6x forward P/B. Dive into our free research report to see why there are better opportunities than WFC.

Stocks We Like More

Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.

Don’t let fear keep you from great opportunities and take a look at 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-micro-cap company Kadant (+351% 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

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