Expensive stocks typically earn their valuations through superior growth rates that other companies simply can’t match. The flip side though is that these lofty expectations make them particularly susceptible to drawdowns when market sentiment shifts.
Separating true intrinsic value from speculation isn’t easy, especially during bull markets. That’s where StockStory comes in - to help you find high-quality companies that will stand the test of time. Keeping that in mind, here is one high-flying stock expanding its competitive advantage and two climbing an uphill battle.
Two High-Flying Stocks to Sell:
Shake Shack (SHAK)
Forward P/E Ratio: 71x
Started as a hot dog cart in New York City's Madison Square Park, Shake Shack (NYSE: SHAK) is a fast-food restaurant known for its burgers and milkshakes.
Why Do We Think Twice About SHAK?
- Responsiveness to unforeseen market trends is restricted due to its substandard operating profitability
- Low free cash flow margin of 1.6% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Negative returns on capital show that some of its growth strategies have backfired
Shake Shack is trading at $94.50 per share, or 71x forward P/E. To fully understand why you should be careful with SHAK, check out our full research report (it’s free).
Pursuit (PRSU)
Forward P/E Ratio: 120.8x
With attractions ranging from glacier tours in the Canadian Rockies to an oceanfront geothermal lagoon in Iceland, Pursuit Attractions and Hospitality (NYSE: PRSU) operates iconic travel experiences, experiential marketing services, and exhibition management across North America and Europe.
Why Should You Sell PRSU?
- Sales tumbled by 2.4% annually over the last five years, showing consumer trends are working against its favor
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 6.3% annually, worse than its revenue
- Negative returns on capital show that some of its growth strategies have backfired
At $30.20 per share, Pursuit trades at 120.8x forward P/E. Dive into our free research report to see why there are better opportunities than PRSU.
One High-Flying Stock to Buy:
Samsara (IOT)
Forward P/S Ratio: 15.2x
One of the few public companies where Marc Andreessen is a Board member, Samsara (NYSE: IOT) provides software and hardware to track industrial equipment, assets, and fleets.
Why Are We Bullish on IOT?
- Customers view its software as mission-critical to their operations as its ARR has averaged 35% growth over the last year
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
Samsara’s stock price of $41.40 implies a valuation ratio of 15.2x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
