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.
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.
Casella Waste Systems (CWST)
Forward P/E Ratio: 97.5x
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 Fall Short?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Efficiency has decreased over the last five years as its operating margin fell by 4 percentage points
- Earnings per share were flat while its revenue grew over the last two years, partly because it issued new shares
At $117.53 per share, Casella Waste Systems trades at 97.5x forward P/E. Dive into our free research report to see why there are better opportunities than CWST.
RXO (RXO)
Forward P/E Ratio: 54.4x
With access to millions of trucks, RXO (NYSE: RXO) offers full-truckload, less-than-truckload, and last-mile deliveries.
Why Do We Avoid RXO?
- Muted 6.2% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Performance over the past four years shows its incremental sales were much less profitable, as its earnings per share fell by 38.8% annually
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
RXO’s stock price of $15.35 implies a valuation ratio of 54.4x forward P/E. To fully understand why you should be careful with RXO, check out our full research report (it’s free).
Gartner (IT)
Forward P/E Ratio: 32.6x
With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE: IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities.
Why Are We Hesitant About IT?
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 9.3% annually
Gartner is trading at $405 per share, or 32.6x forward P/E. Check out our free in-depth research report to learn more about why IT doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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
