Exciting developments are taking place for the stocks in this article. They’ve all surged ahead of the broader market over the last month as catalysts such as new products and positive media coverage have propelled their returns.
But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. Keeping that in mind, here are three stocks that are likely overheated and some you should look into instead.
Appian (APPN)
One-Month Return: +32.8%
Powering billions of transactions daily since its founding in 1999, Appian (NASDAQ: APPN) provides a low-code platform that helps businesses automate complex processes and operationalize artificial intelligence without extensive programming knowledge.
Why Are We Wary of APPN?
- 14.6% annual revenue growth over the last two years was slower than its software peers
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
- Projected 6 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
Appian’s stock price of $42 implies a valuation ratio of 4x forward price-to-sales. Check out our free in-depth research report to learn more about why APPN doesn’t pass our bar.
Golden Entertainment (GDEN)
One-Month Return: +34%
Founded in 2001, Golden Entertainment (NASDAQ: GDEN) is a gaming company operating casinos, taverns, and distributed gaming platforms.
Why Do We Pass on GDEN?
- Annual revenue declines of 2.5% over the last five years indicate problems with its market positioning
- Poor free cash flow margin of 4.3% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Golden Entertainment is trading at $29.53 per share, or 56.8x forward P/E. Read our free research report to see why you should think twice about including GDEN in your portfolio.
CSG (CSGS)
One-Month Return: +15.5%
Powering billions of critical customer interactions annually, CSG Systems (NASDAQ: CSGS) provides cloud-based software platforms that help companies manage customer interactions, process payments, and monetize their services.
Why Are We Hesitant About CSGS?
- Sales trends were unexciting over the last two years as its 2.3% annual growth was below the typical business services company
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.7%
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $77.84 per share, CSG trades at 15.5x forward P/E. To fully understand why you should be careful with CSGS, check out our full research report (it’s free for active Edge members).
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 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
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