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. 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:
Walmart (WMT)
Forward P/E Ratio: 37.1x
Known for its large-format Supercenters, Walmart (NYSE: WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.
Why Does WMT Worry Us?
- Sizable revenue base leads to growth challenges as its 5% annual revenue increases over the last six years fell short of other consumer retail companies
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 24.8% that must be offset through higher volumes
- Operating margin of 4.2% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
Walmart’s stock price of $102.40 implies a valuation ratio of 37.1x forward P/E. Check out our free in-depth research report to learn more about why WMT doesn’t pass our bar.
NeoGenomics (NEO)
Forward P/E Ratio: 64x
Operating a network of CAP-accredited and CLIA-certified laboratories across the United States and United Kingdom, NeoGenomics (NASDAQ: NEO) provides specialized cancer diagnostic testing services, including genetic analysis, molecular testing, and pathology consultation for oncologists and healthcare providers.
Why Do We Steer Clear of NEO?
- Revenue base of $709.2 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Push for growth has led to negative returns on capital, signaling value destruction
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
NeoGenomics is trading at $10.27 per share, or 64x forward P/E. To fully understand why you should be careful with NEO, check out our full research report (it’s free for active Edge members).
One High-Flying Stock to Buy:
AppLovin (APP)
Forward P/S Ratio: 26.4x
Sitting at the crossroads of the mobile advertising ecosystem with over 200 free-to-play games in its portfolio, AppLovin (NASDAQ: APP) provides software solutions that help mobile app developers market, monetize, and grow their apps through AI-powered advertising and analytics tools.
Why Will APP Beat the Market?
- Annual revenue growth of 30.9% over the last two years was superb and indicates its market share is rising
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
- Strong free cash flow margin of 64.5% enables it to reinvest or return capital consistently
At $558.38 per share, AppLovin trades at 26.4x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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
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