The stocks in this article are all trading near their 52-week highs. This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance.
However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. All that said, here are three stocks getting more buzz than they deserve and some you should buy instead.
Jabil (JBL)
One-Month Return: -0.6%
With manufacturing facilities spanning the globe from China to Mexico to the United States, Jabil (NYSE: JBL) provides electronics design, manufacturing, and supply chain solutions to companies across various industries, from healthcare to automotive to cloud computing.
Why Do We Think Twice About JBL?
- Annual sales declines of 10.1% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 1.6% annually
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Jabil’s stock price of $219.21 implies a valuation ratio of 21.7x forward P/E. Check out our free in-depth research report to learn more about why JBL doesn’t pass our bar.
Vontier (VNT)
One-Month Return: +12.3%
A spin-off of a spin-off, Vontier (NYSE: VNT) provides electronic products and systems to the transportation, automotive, and manufacturing sectors.
Why Should You Dump VNT?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Free cash flow margin shrank by 7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Waning returns on capital imply its previous profit engines are losing steam
At $43.18 per share, Vontier trades at 13.2x forward P/E. Dive into our free research report to see why there are better opportunities than VNT.
AerSale (ASLE)
One-Month Return: +51.5%
Providing a one-stop shop that integrates multiple services and product offerings, AerSale (NASDAQ: ASLE) delivers full-service support to mid-life commercial aircraft.
Why Is ASLE Risky?
- Sales trends were unexciting over the last five years as its 3.7% annual growth was below the typical industrials company
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
AerSale is trading at $8.88 per share, or 26.6x forward P/E. Read our free research report to see why you should think twice about including ASLE in your portfolio.
High-Quality Stocks for All Market Conditions
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