3 Hyped Up Stocks That Concern Us

via StockStory

TXG Cover Image

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.

But not every company with momentum is a long-term winner, and plenty of investors have lost money betting on short-term fads. All that said, here are three stocks getting more buzz than they deserve and some you should buy instead.

10x Genomics (TXG)

One-Month Return: +27.5%

Founded in 2012 by scientists seeking to overcome limitations in traditional biological research methods, 10x Genomics (NASDAQ:TXG) develops instruments, consumables, and software that enable researchers to analyze biological systems at single-cell resolution and spatial context.

Why Are We Hesitant About TXG?

  1. Sales trends were unexciting over the last two years as its 4.2% annual growth was below the typical healthcare company
  2. Negative free cash flow raises questions about the return timeline for its investments
  3. Push for growth has led to negative returns on capital, signaling value destruction

10x Genomics is trading at $20.47 per share, or 4.4x forward price-to-sales. Read our free research report to see why you should think twice about including TXG in your portfolio.

Northern Trust (NTRS)

One-Month Return: +4.3%

Founded in 1889 during Chicago's post-Great Fire rebuilding boom, Northern Trust (NASDAQ:NTRS) provides wealth management, asset servicing, and banking solutions to corporations, institutions, families, and high-net-worth individuals globally.

Why Is NTRS Not Exciting?

  1. Muted 5.2% annual revenue growth over the last five years shows its demand lagged behind its financials peers
  2. Earnings per share lagged its peers over the last five years as they only grew by 6.6% annually

At $145.49 per share, Northern Trust trades at 15.6x forward P/E. To fully understand why you should be careful with NTRS, check out our full research report (it’s free).

Stifel (SF)

One-Month Return: +0.7%

Tracing its roots back to 1890 when the firm was established in St. Louis, Stifel Financial (NYSE:SF) is a financial services firm that provides wealth management, investment banking, and institutional brokerage services to individuals, corporations, and institutions.

Why Does SF Fall Short?

  1. Earnings growth underperformed the sector average over the last five years as its EPS grew by just 9% annually
  2. 6.1% annual book value per share growth over the last two years was slower than its financials peers

Stifel’s stock price of $128.25 implies a valuation ratio of 14x forward P/E. Check out our free in-depth research report to learn more about why SF doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

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