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.
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:
Estée Lauder (EL)
Forward P/E Ratio: 31.8x
Named after its founder, who was an entrepreneurial woman from New York with a passion for skincare, Estée Lauder (NYSE: EL) is a one-stop beauty shop with products in skincare, fragrance, makeup, sun protection, and men’s grooming.
Why Does EL Fall Short?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Subpar operating margin of 0% constrains its ability to invest in process improvements or effectively respond to new competitive threats
- Issuance of new shares over the last three years caused its earnings per share to fall by 10.1% annually, even worse than its revenue declines
Estée Lauder is trading at $105.20 per share, or 31.8x forward P/E. Check out our free in-depth research report to learn more about why EL doesn’t pass our bar.
Deere (DE)
Forward P/E Ratio: 30.3x
Revolutionizing agriculture with the first self-polishing cast-steel plow in the 1800s, Deere (NYSE: DE) manufactures and distributes advanced agricultural, construction, forestry, and turf care equipment.
Why Is DE Risky?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 7.4% annually over the last two years
- Earnings per share have dipped by 21.7% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $637.27 per share, Deere trades at 30.3x forward P/E. Read our free research report to see why you should think twice about including DE in your portfolio.
One High-Flying Stock to Watch:
Lattice Semiconductor (LSCC)
Forward P/E Ratio: 43.7x
A global leader in its category, Lattice Semiconductor (NASDAQ: LSCC) is a semiconductor designer specializing in customer-programmable chips that enhance CPU performance for intensive tasks such as machine learning.
Why Does LSCC Stand Out?
- Exciting sales outlook for the upcoming 12 months calls for 80.6% growth, an acceleration from its two-year trend
- Superior product capabilities and pricing power result in a best-in-class gross margin of 68.6%
- LSCC is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Lattice Semiconductor’s stock price of $121.80 implies a valuation ratio of 43.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
