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.
Finding the right balance between price and quality can challenge even the most skilled investors. Luckily for you, we started StockStory to help you identify the real opportunities. Keeping that in mind, here is one high-flying stock to hold for the long term and two with big downside risk.
Two High-Flying Stocks to Sell:
Bark (BARK)
Forward P/E Ratio: 45.8x
Making a name for itself with the BarkBox, Bark (NYSE: BARK) specializes in subscription-based, personalized pet products.
Why Do We Pass on BARK?
- Sales tumbled by 4.9% annually over the last two years, showing consumer trends are working against its favor
- Persistent operating margin losses suggest the business manages its expenses poorly
- Cash burn makes us question whether it can achieve sustainable long-term growth
At $0.91 per share, Bark trades at 45.8x forward P/E. To fully understand why you should be careful with BARK, check out our full research report (it’s free).
FARO (FARO)
Forward P/E Ratio: 39.6x
Launched by two PhD students in a garage, FARO (NASDAQ: FARO) provides 3D measurement and imaging systems for the manufacturing, construction, engineering, and public safety industries.
Why Are We Hesitant About FARO?
- Sales tumbled by 1.5% annually over the last five years, showing market trends are working against its favor during this cycle
- Poor expense management has led to operating margin losses
- Cash-burning history makes us doubt the long-term viability of its business model
FARO’s stock price of $43.81 implies a valuation ratio of 39.6x forward P/E. If you’re considering FARO for your portfolio, see our FREE research report to learn more.
One High-Flying Stock to Watch:
VeriSign (VRSN)
Forward P/S Ratio: 16.6x
While the company is not a domain registrar and does not directly sell domain names to end users, Verisign (NASDAQ: VRSN) operates and maintains the infrastructure to support domain names such as .com and .net.
Why Should VRSN Be on Your Watchlist?
- Average billings growth of 15.6% over the last year enhances its liquidity and shows there is steady demand for its products
- Superior software functionality and low servicing costs result in a best-in-class gross margin of 87.8%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
VeriSign is trading at $283 per share, or 16.6x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. 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-micro-cap company Kadant (+351% 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
