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.
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 stocks getting more buzz than they deserve and some you should buy instead.
ESAB (ESAB)
One-Month Return: +11%
Having played a significant role in the construction of the iconic Sydney Opera House, ESAB (NYSE:ESAB) manufactures and sells welding and cutting equipment for numerous industries.
Why Does ESAB Worry Us?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.2 percentage points
ESAB is trading at $134.94 per share, or 23.6x forward P/E. Dive into our free research report to see why there are better opportunities than ESAB.
Norfolk Southern (NSC)
One-Month Return: +8.4%
Starting with a single route from Virginia to North Carolina, Norfolk Southern (NYSE:NSC) is a freight transportation company operating a major railroad network across the eastern United States.
Why Do We Steer Clear of NSC?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 4.1 percentage points
- Free cash flow margin dropped by 8.4 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Norfolk Southern’s stock price of $315.07 implies a valuation ratio of 26x forward P/E. To fully understand why you should be careful with NSC, check out our full research report (it’s free).
Gates Industrial Corporation (GTES)
One-Month Return: +22.2%
Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE:GTES) offers power transmission and fluid transfer equipment for various industries.
Why Does GTES Fall Short?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Anticipated sales growth of 3.9% for the next year implies demand will be shaky
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $27.80 per share, Gates Industrial Corporation trades at 17.1x forward P/E. If you’re considering GTES for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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 5 Strong Momentum Stocks for this week. 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.
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