Stock that’s up 170 percent this year is starting to look ‘very dangerous’

Square has surged 167 percent this year alone, but Fort Pitt Capital senior equity analyst Kim Forrest says it could be time to pump the brakes on the payment stock.

"We don't own it, and this looks like a very dangerous momentum stock," she said Tuesday on CNBC's "Power Lunch." "Momentum people love growth, and it looks like it may be topping out here right now, especially with respect to the real transaction revenue."

"It's a cautionary tale," she added. "It's been great, but if I owned it I would certainly sell some of it now just to take some money off the table."

Square, whose CEO is Twitter chief Jack Dorsey, has been part of the high-flying payments space, which has also seen credit card stocks like American Express and Visa soaring to new all-time highs. But Mike Binger, portfolio manager at Gradient Investments, also believes other names in the group might actually be a better buy.

"Square is in the financial payments sector of the market. In our portfolios, we own Visa and PayPal there," he said. "We prefer their profitability and their more mature business models."

According to Binger, Square has become too expensive, and a possible change to its business model could also impact the stock.

"Don't forget that Square has applied for a banking license," he said. "If they get that license, they want to be a lender, and that's a whole different game that comes with a whole different multiple."

"I think Square is a stock priced to perfection, and I would wait for a better entry point on it," he added.

On Tuesday, Square was still trading around its all-time highs at $36.

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Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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