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. Keeping that in mind, here are three overhyped stocks that may correct and some you should consider instead.
Workday (WDAY)
One-Month Return: +15.6%
Born from the vision of PeopleSoft founders after Oracle’s hostile takeover of their previous company, Workday (NASDAQ:WDAY) provides cloud-based software for financial management, human resources, planning, and analytics to help organizations manage their business operations.
Why Does WDAY Give Us Pause?
- Revenue increased by 14.1% annually over the last two years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Estimated sales growth of 10.9% for the next 12 months implies demand will slow from its two-year trend
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
At $146.73 per share, Workday trades at 3x forward price-to-sales. To fully understand why you should be careful with WDAY, check out our full research report (it’s free).
GEO Group (GEO)
One-Month Return: +21.1%
With a global footprint spanning three continents and approximately 81,000 beds across 100 facilities, GEO Group (NYSE:GEO) operates secure facilities, processing centers, and reentry services for government agencies in the United States, Australia, and South Africa.
Why Are We Hesitant About GEO?
- Sales trends were unexciting over the last five years as its 3.3% annual growth was below the typical business services company
- Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 4 percentage points
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 11.1 percentage points
GEO Group’s stock price of $22.71 implies a valuation ratio of 1x forward price-to-sales. Read our free research report to see why you should think twice about including GEO in your portfolio.
Garrett Motion (GTX)
One-Month Return: +25.9%
A key player in the transition to cleaner vehicles, Garrett Motion (NYSE:GTX) designs and manufactures turbochargers, air compressors, and electric motor technologies for vehicle manufacturers and industrial applications.
Why Do We Think Twice About GTX?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.8% annually over the last two years
- Estimated sales growth of 3.5% for the next 12 months is soft and implies weaker demand
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 19.8%
Garrett Motion is trading at $32.56 per share, or 1.7x forward price-to-sales. If you’re considering GTX for your portfolio, see our FREE research report to learn more.
Stocks We Like More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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.
