"You get what you pay for" often applies to expensive stocks with best-in-class business models and execution. While their quality can sometimes justify the premium, they typically experience elevated volatility during market downturns when expectations change.
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. That said, here are three high-flying stocks with big downside risk and some other investments you should consider instead.
Smith & Wesson (SWBI)
Forward P/E Ratio: 54.8x
With a history dating back to 1852, Smith & Wesson (NASDAQ: SWBI) is a firearms manufacturer known for its handguns and rifles.
Why Do We Think SWBI Will Underperform?
- Annual revenue declines of 6.6% over the last five years indicate problems with its market positioning
- Cash-burning history makes us doubt the long-term viability of its business model
- Waning returns on capital imply its previous profit engines are losing steam
Smith & Wesson is trading at $10.03 per share, or 54.8x forward P/E. Check out our free in-depth research report to learn more about why SWBI doesn’t pass our bar.
Rogers (ROG)
Forward P/E Ratio: 39.3x
With roots dating back to 1832, making it one of America's oldest continuously operating companies, Rogers (NYSE: ROG) designs and manufactures specialized engineered materials and components used in electric vehicles, telecommunications, renewable energy, and other high-performance applications.
Why Are We Out on ROG?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 15.3% annually
- Free cash flow margin dropped by 8.7 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Rogers’s stock price of $84.30 implies a valuation ratio of 39.3x forward P/E. Dive into our free research report to see why there are better opportunities than ROG.
Exact Sciences (EXAS)
Forward P/E Ratio: 85.9x
With a mission to detect cancer earlier when it's more treatable, Exact Sciences (NASDAQ: EXAS) develops and markets cancer screening and diagnostic tests, including its flagship Cologuard stool-based colorectal cancer screening test.
Why Do We Think Twice About EXAS?
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Negative returns on capital show that some of its growth strategies have backfired
At $61.33 per share, Exact Sciences trades at 85.9x forward P/E. If you’re considering EXAS for your portfolio, see our FREE research report to learn more.
Stocks We Like More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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