Expensive stocks often command premium valuations because the market thinks their business models are exceptional. However, the downside is that high expectations are already baked into their prices, leaving little room for error if they stumble even slightly.
Determining whether a company’s quality justifies its price causes headaches for nearly all investors, which is why we started StockStory - to help you separate the real opportunities from the speculative ones. That said, here is one high-flying stock expanding its competitive advantage and two where the price is not right.
Two High-Flying Stocks to Sell:
Figs (FIGS)
Forward P/E Ratio: 63.5x
Rising to fame via TikTok and founded in 2013 by Heather Hasson and Trina Spear, Figs (NYSE: FIGS) is a healthcare apparel company known for its stylish approach to medical attire and uniforms.
Why Is FIGS Risky?
- 19.1% annual revenue growth over the last five years was slower than its consumer discretionary peers
- Earnings per share have contracted by 3.6% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- Free cash flow margin is not anticipated to grow over the next year
Figs is trading at $16.03 per share, or 63.5x forward P/E. If you’re considering FIGS for your portfolio, see our FREE research report to learn more.
Avis Budget Group (CAR)
Forward P/E Ratio: 179.4x
The parent company of brands such as Zipcar and Budget Truck Rental, Avis (NASDAQ: CAR) is a provider of car rental and mobility solutions.
Why Does CAR Fall Short?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.5% annually over the last two years
- Diminishing returns on capital suggest its earlier profit pools are drying up
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $761.50 per share, Avis Budget Group trades at 179.4x forward P/E. Dive into our free research report to see why there are better opportunities than CAR.
One High-Flying Stock to Watch:
Marvell Technology (MRVL)
Forward P/E Ratio: 38.7x
Moving away from a low margin storage device management chips in one of the biggest semiconductor business model pivots of the past decade, Marvell Technology (NASDAQ: MRVL) is a fabless designer of special purpose data processing and networking chips used by data centers, communications carriers, enterprises, and autos.
Why Are We Positive On MRVL?
- Annual revenue growth of 22.5% over the last five years was superb and indicates its market share increased during this cycle
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 32.5%
- Operating margin expanded by 23.9 percentage points over the last five years as it scaled and became more efficient
Marvell Technology’s stock price of $152.56 implies a valuation ratio of 38.7x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
