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. Keeping that in mind, here is one high-flying stock expanding its competitive advantage and two with big downside risk.
Two High-Flying Stocks to Sell:
Hilton (HLT)
Forward P/E Ratio: 31.7x
Founded in 1919, Hilton Worldwide (NYSE: HLT) is a global hospitality company with a portfolio of hotel brands.
Why Is HLT Risky?
- Revenue per room has underperformed over the past two years, suggesting it may need to develop new facilities
- Poor expense management has led to an operating margin of 22.3% that is below the industry average
- Free cash flow margin is not anticipated to grow over the next year
Hilton’s stock price of $302.29 implies a valuation ratio of 31.7x forward P/E. If you’re considering HLT for your portfolio, see our FREE research report to learn more.
WEBTOON (WBTN)
Forward P/E Ratio: 109.7x
Pioneering a vertical-scrolling format optimized for mobile devices, WEBTOON Entertainment (NASDAQ: WBTN) operates a global platform where creators publish serialized web-comics and web-novels that users can read in bite-sized episodes.
Why Are We Cautious About WBTN?
- 2.6% annual revenue growth over the last two years was slower than its business services peers
- Earnings per share have contracted by 78.9% annually over the last one years, a headwind for returns as stock prices often echo long-term EPS performance
- Low free cash flow margin of -0.8% for the last four years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
At $10.44 per share, WEBTOON trades at 109.7x forward P/E. Check out our free in-depth research report to learn more about why WBTN doesn’t pass our bar.
One High-Flying Stock to Watch:
Casella Waste Systems (CWST)
Forward P/E Ratio: 72.4x
Starting with the founder picking up garbage with a pickup truck he purchased using savings from high school, Casella (NASDAQ: CWST) offers waste management services for businesses, residents, and the government.
Why Does CWST Catch Our Eye?
- Annual revenue growth of 16.9% over the last two years was superb and indicates its market share increased during this cycle
- Projected revenue growth of 12.1% for the next 12 months suggests its momentum from the last two years will persist
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 38.3% annually
Casella Waste Systems is trading at $88.72 per share, or 72.4x forward P/E. Is now a good time to buy? See for yourself in our in-depth 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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
