3 Overrated Stocks Skating on Thin Ice

SMTC Cover Image

The stocks featured in this article are seeing some big returns. Over the past month, they’ve outpaced the market due to new product launches, positive news, or even a dedicated social media following.

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 stocks getting more buzz than they deserve and some you should buy instead.

Semtech (SMTC)

One-Month Return: +14.6%

A public company since the late 1960s, Semtech (NASDAQ: SMTC) is a provider of analog and mixed-signal semiconductors used for Internet of Things systems and cloud connectivity.

Why Should You Dump SMTC?

  1. Mounting operating losses demonstrate the tradeoff between growth and profitability
  2. Free cash flow margin dropped by 6.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
  3. Negative returns on capital show that some of its growth strategies have backfired, and its shrinking returns suggest its past profit sources are losing steam

Semtech’s stock price of $46.84 implies a valuation ratio of 27x forward P/E. Check out our free in-depth research report to learn more about why SMTC doesn’t pass our bar.

Golden Entertainment (GDEN)

One-Month Return: +18.4%

Founded in 2001, Golden Entertainment (NASDAQ: GDEN) is a gaming company operating casinos, taverns, and distributed gaming platforms.

Why Does GDEN Worry Us?

  1. Annual revenue declines of 7% over the last five years indicate problems with its market positioning
  2. Projected sales growth of 2.7% for the next 12 months suggests sluggish demand
  3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 3.9% for the last two years

At $32.59 per share, Golden Entertainment trades at 5.7x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than GDEN.

eXp World (EXPI)

One-Month Return: +14.8%

Founded in 2009, eXp World (NASDAQ: EXPI) is a real estate company known for its virtual, cloud-based approach to real estate brokerage.

Why Should You Sell EXPI?

  1. Sluggish trends in its transactions suggest customers aren’t adopting its solutions as quickly as the company hoped
  2. Operating margin of -0.3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
  3. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 49.7% annually

eXp World is trading at $10.40 per share, or 23.7x forward P/E. Read our free research report to see why you should think twice about including EXPI in your portfolio.

Stocks We Like More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. 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

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.

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