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.

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 climbing an uphill battle and some alternatives you should consider instead.

Potbelly (PBPB)

Forward P/E Ratio: 54.8x

With a unique origin story where the company actually started as an antique shop, Potbelly (NASDAQ: PBPB) today is a chain known for its toasty sandwiches.

Why Do We Avoid PBPB?

1. Sales trends were unexciting over the last six years as its 2.1% annual growth was below the typical restaurant company
2. Revenue base of $469.1 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Negative returns on capital show management lost money while trying to expand the business

Potbelly is trading at $17.11 per share, or 54.8x forward P/E. To fully understand why you should be careful with PBPB, check out our full research report (it’s free for active Edge members).

Nike (NKE)

Forward P/E Ratio: 35.9x

Originally selling Japanese Onitsuka Tiger sneakers as Blue Ribbon Sports, Nike (NYSE: NKE) is a global titan in athletic footwear, apparel, equipment, and accessories.

Why Is NKE Risky?

1. Constant currency revenue growth has disappointed over the past two years and shows demand was soft
2. Projected 2.9 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Nike’s stock price of $67.33 implies a valuation ratio of 35.9x forward P/E. Dive into our free research report to see why there are better opportunities than NKE.

RXO (RXO)

Forward P/E Ratio: 73.5x

With access to millions of trucks, RXO (NYSE: RXO) offers full-truckload, less-than-truckload, and last-mile deliveries.

Why Are We Hesitant About RXO?

1. Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 5.4 percentage points
2. Incremental sales over the last two years were much less profitable as its earnings per share fell by 61.7% annually while its revenue grew
3. ROIC of -0.5% reflects management’s challenges in identifying attractive investment opportunities

At $16.34 per share, RXO trades at 73.5x forward P/E. Read our free research report to see why you should think twice about including RXO in your portfolio.

Stocks We Like More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. 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 Tecnoglass (+1,754% 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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