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.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. All that said, here are three stocks getting more buzz than they deserve and some you should buy instead.
Allison Transmission (ALSN)
One-Month Return: +12.9%
Helping build race cars at one point, Allison Transmission (NYSE: ALSN) offers transmissions to original equipment manufacturers and fleet operators.
Why Is ALSN Not Exciting?
- Annual revenue growth of 1.5% over the last two years was below our standards for the industrials sector
- Forecasted revenue decline of 4.7% for the upcoming 12 months implies demand will fall off a cliff
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 6.3% annually
At $100.81 per share, Allison Transmission trades at 14x forward P/E. Read our free research report to see why you should think twice about including ALSN in your portfolio.
Fortrea (FTRE)
One-Month Return: +40%
Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea (NASDAQ: FTRE) is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.
Why Do We Pass on FTRE?
- Annual sales declines of 2.6% for the past four years show its products and services struggled to connect with the market during this cycle
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Fortrea is trading at $17.41 per share, or 26.2x forward P/E. To fully understand why you should be careful with FTRE, check out our full research report (it’s free for active Edge members).
Flagstar Financial (FLG)
One-Month Return: +2.6%
Tracing its roots back to 1859 and rebranded from New York Community Bancorp in 2024, Flagstar Financial (NYSE: FLG) is a bank holding company that offers commercial and consumer banking services, with specialties in multi-family lending, mortgage originations, and warehouse lending.
Why Do We Think FLG Will Underperform?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 19.5% annually over the last two years
- Net interest margin of 1.9% reflects its high servicing and capital costs
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 18.3% annually while its revenue grew
Flagstar Financial’s stock price of $12.73 implies a valuation ratio of 0.8x forward P/B. If you’re considering FLG for your portfolio, see our FREE research report to learn more.
Stocks We Like More
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 9 Market-Beating Stocks. 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-small-cap company Comfort Systems (+782% 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.
