The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to some combination of positive news, upbeat results, or supportive macro developments. As such, investors are taking notice and bidding up shares.

However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. On that note, here are three overhyped stocks that may correct and some you should consider instead.

Qualys (QLYS)

One-Month Return: +20.6%

Originally developed to address the growing complexity of IT security in the cloud era, Qualys (NASDAQ: QLYS) provides a cloud-based platform that helps organizations identify, manage, and protect their IT assets from cyber threats across on-premises, cloud, and mobile environments.

Why Are We Hesitant About QLYS?

1. Customers had second thoughts about committing to its platform over the last year as its average billings growth of 9.1% underwhelmed
2. Estimated sales growth of 7.7% for the next 12 months implies demand will slow from its two-year trend
3. Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage

Qualys’s stock price of $110.43 implies a valuation ratio of 5.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than QLYS.

Carter's (CRI)

One-Month Return: +21.6%

Rumored to sell more than 10 products for every child born in the United States, Carter's (NYSE: CRI) is an American designer and marketer of children's apparel.

Why Do We Pass on CRI?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 6% for the last two years
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Carter's is trading at $39.80 per share, or 11.6x forward P/E. Read our free research report to see why you should think twice about including CRI in your portfolio.

Covenant Logistics (CVLG)

One-Month Return: +38%

Started with 25 trucks and 50 trailers, Covenant Logistics (NASDAQ: CVLG) is a provider of expedited long haul freight services, offering a range of logistics solutions.

Why Do We Steer Clear of CVLG?

1. 3.8% annual revenue growth over the last two years was slower than its industrials peers
2. Earnings per share fell by 15.7% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

At $45.00 per share, Covenant Logistics trades at 0.9x forward price-to-sales. If you’re considering CVLG for your portfolio, see our FREE research report to learn more.

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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.