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.
Topgolf Callaway (MODG)
One-Month Return: +2.2%
Formed between the merger of Callaway and Topgolf, Topgolf Callaway (NYSE:MODG) sells golf equipment and operates technology-driven golf entertainment venues.
Why Are We Out on MODG?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 15.3% annually
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Topgolf Callaway’s stock price of $9.72 implies a valuation ratio of 3.7x forward EV-to-EBITDA. To fully understand why you should be careful with MODG, check out our full research report (it’s free for active Edge members).
Donaldson (DCI)
One-Month Return: -0.1%
Playing a vital role in the historic Apollo 11 mission, Donaldson (NYSE:DCI) manufacturers and sells filtration equipment for various industries.
Why Are We Cautious About DCI?
- 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 growth of 3.2% for the next 12 months suggests sluggish demand
- Free cash flow margin shrank by 2.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Donaldson is trading at $83.66 per share, or 21.2x forward P/E. Check out our free in-depth research report to learn more about why DCI doesn’t pass our bar.
C.H. Robinson Worldwide (CHRW)
One-Month Return: +15.9%
Engaging in contracts with tens of thousands of transportation companies, C.H. Robinson (NASDAQ:CHRW) offers freight transportation and logistics services.
Why Does CHRW Fall Short?
- Annual sales declines of 5.4% for the past two years show its products and services struggled to connect with the market during this cycle
- High input costs result in an inferior gross margin of 7.4% that must be offset through higher volumes
- Waning returns on capital imply its previous profit engines are losing steam
At $148.63 per share, C.H. Robinson Worldwide trades at 26.3x forward P/E. Read our free research report to see why you should think twice about including CHRW in your portfolio.
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 9 Market-Beating Stocks. 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-small-cap company Comfort Systems (+782% 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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