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 overhyped stocks that may correct and some you should consider instead.

Ameresco (AMRC)

One-Month Return: +45.1%

Having played a role in upgrading the energy solutions of Alcatraz Island, Ameresco (NYSE: AMRC) provides energy and renewable energy solutions for various sectors.

Why Does AMRC Give Us Pause?

1. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 16.5%
2. Negative free cash flow raises questions about the return timeline for its investments
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

At $41.80 per share, Ameresco trades at 46.7x forward P/E. Check out our free in-depth research report to learn more about why AMRC doesn’t pass our bar.

Plug Power (PLUG)

One-Month Return: +150%

Powering forklifts for Walmart’s distribution centers, Plug Power (NASDAQ: PLUG) provides hydrogen fuel cells used to power electric motors.

Why Do We Pass on PLUG?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 12.6% annually over the last two years
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6,283 percentage points
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Plug Power is trading at $3.93 per share, or 5.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PLUG.

Applied Digital (APLD)

One-Month Return: +83.4%

Pivoting from its origins in cryptocurrency mining to become a key player in the AI infrastructure boom, Applied Digital (NASDAQ: APLD) designs and operates specialized data centers that provide high-performance computing infrastructure for artificial intelligence and blockchain applications.

Why Does APLD Worry Us?

1. Incremental sales over the last two years were much less profitable as its earnings per share fell by 83.8% annually while its revenue grew
2. Free cash flow margin dropped by 54.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

Applied Digital’s stock price of $35.48 implies a valuation ratio of 88.3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including APLD in your portfolio.

Stocks We Like More

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at 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 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

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