"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.

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. That said, here are three high-flying stocks where the price is not right and some other investments you should look into instead.

Peloton (PTON)

Forward P/E Ratio: 46.3x

Started as a Kickstarter campaign, Peloton (NASDAQ: PTON) is a fitness technology company known for its at-home exercise equipment and interactive online workout classes.

Why Do We Steer Clear of PTON?

1. Performance surrounding its connected fitness subscribers has lagged its peers
2. Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 16.5% annually
3. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital

Peloton is trading at $6.50 per share, or 46.3x forward P/E. Dive into our free research report to see why there are better opportunities than PTON.

Himax (HIMX)

Forward P/E Ratio: 60.7x

Taiwan-based Himax Technologies (NASDAQ: HIMX) is a leading manufacturer of display driver chips and timing controllers used in TVs, laptops, and mobile phones.

Why Do We Pass on HIMX?

1. Annual sales declines of 6% for the past two years show its products and services struggled to connect with the market during this cycle
2. Projected sales decline of 4.4% over the next 12 months indicates demand will continue deteriorating
3. Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 22.9 percentage points

Himax’s stock price of $8.85 implies a valuation ratio of 60.7x forward P/E. To fully understand why you should be careful with HIMX, check out our full research report (it’s free for active Edge members).

Root (ROOT)

Forward P/B Ratio: 4.2x

Pioneering a data-driven approach that rewards good driving habits, Root (NASDAQ: ROOT) is a technology-driven auto insurance company that uses mobile apps to acquire customers and data science to price policies based on individual driving behavior.

Why Is ROOT Not Exciting?

1. Book value per share tumbled by 158% annually over the last five years, showing insurance sector trends are working against its favor during this cycle
2. Negative return on equity shows management lost money while trying to expand the business

At $81.09 per share, Root trades at 4.2x forward P/B. Check out our free in-depth research report to learn more about why ROOT doesn’t pass our bar.

Stocks We Like 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 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 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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