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 expanding its competitive advantage and two where the price is not right.
Two High-Flying Stocks to Sell:
LifeStance Health Group (LFST)
Forward P/E Ratio: 31.9x
With over 6,600 licensed mental health professionals treating more than 880,000 patients annually, LifeStance Health (NASDAQ: LFST) provides outpatient mental health services through a network of clinicians offering psychiatric evaluations, psychological testing, and therapy across 33 states.
Why Are We Hesitant About LFST?
- Subscale operations are evident in its revenue base of $1.32 billion, meaning it has fewer distribution channels than its larger rivals
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Push for growth has led to negative returns on capital, signaling value destruction
LifeStance Health Group’s stock price of $5.29 implies a valuation ratio of 31.9x forward P/E. Dive into our free research report to see why there are better opportunities than LFST.
Affirm (AFRM)
Forward P/E Ratio: 34.7x
Founded by PayPal co-founder Max Levchin with a mission to create honest financial products, Affirm (NASDAQ: AFRM) provides a payment network that allows consumers to make purchases and pay for them over time with transparent, flexible installment loans.
Why Are We Cautious About AFRM?
- Negative return on equity shows that some of its growth strategies have backfired
- 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Affirm is trading at $72.99 per share, or 34.7x forward P/E. Read our free research report to see why you should think twice about including AFRM in your portfolio.
One High-Flying Stock to Buy:
AZEK (AZEK)
Forward P/E Ratio: 35.5x
With a significant portion of its products made from recycled materials, AZEK (NYSE: AZEK) designs and manufactures goods for outdoor living spaces.
Why Will AZEK Outperform?
- Annual revenue growth of 12.4% over the last five years was superb and indicates its market share increased during this cycle
- Share buybacks catapulted its annual earnings per share growth to 56.9%, which outperformed its revenue gains over the last two years
- Free cash flow margin increased by 8.8 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $54.35 per share, AZEK trades at 35.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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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