Great things are happening to the stocks in this article. They’re all outperforming the market over the last month because of positive catalysts such as a new product line, constructive news flow, or even a loyal Reddit fanbase.

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 that are likely overheated and some you should look into instead.

RingCentral (RNG)

One-Month Return: -2.1%

Built on its proprietary Message Video Phone (MVP) platform that unifies multiple communication methods, RingCentral (NYSE: RNG) provides AI-driven cloud communications and collaboration solutions that enable businesses to connect through voice, video, messaging, and contact center services.

Why Should You Sell RNG?

1. Offerings struggled to generate meaningful interest as its average billings growth of 3.8% over the last year did not impress
2. Estimated sales growth of 4.5% for the next 12 months implies demand will slow from its two-year trend
3. Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue

RingCentral’s stock price of $35.37 implies a valuation ratio of 1.3x forward price-to-sales. To fully understand why you should be careful with RNG, check out our full research report (it’s free).

Universal Technical Institute (UTI)

One-Month Return: -0.5%

Founded in 1965, Universal Technical Institute (NYSE: UTI) is a leading provider of technical training programs, specializing in automotive, diesel, collision repair, motorcycle, and marine technicians.

Why Do We Think UTI Will Underperform?

1. Sluggish trends in its new students suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Free cash flow margin is forecasted to shrink by 1.5 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $37.20 per share, Universal Technical Institute trades at 19.4x forward EV-to-EBITDA. If you’re considering UTI for your portfolio, see our FREE research report to learn more.

Ziff Davis (ZD)

One-Month Return: +48.5%

Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ: ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.

Why Should You Dump ZD?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
2. Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 4.1% annually
3. Free cash flow margin dropped by 9.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Ziff Davis is trading at $41.59 per share, or 6.2x forward P/E. Dive into our free research report to see why there are better opportunities than ZD.

Stocks We Like More

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.