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. That said, here are three high-flying stocks with big downside risk and some other investments you should consider instead.

Polaris (PII)

Forward P/E Ratio: 41.1x

Founded in 1954, Polaris (NYSE: PII) designs and manufactures high-performance off-road vehicles, snowmobiles, and motorcycles.

Why Do We Pass on PII?

1. Sales stagnated over the last five years and signal the need for new growth strategies
2. Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 5 percentage points over the next year
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

At $67.72 per share, Polaris trades at 41.1x forward P/E. Check out our free in-depth research report to learn more about why PII doesn’t pass our bar.

Ameresco (AMRC)

Forward P/E Ratio: 33.9x

Having played a role in upgrading the energy solutions of Alcatraz Island, Ameresco (NYSE: AMRC) provides energy and renewable energy solutions for various sectors.

Why Do We Think Twice About AMRC?

1. Gross margin of 16.5% is below its competitors, leaving less money to invest in areas like marketing and R&D
2. Negative free cash flow raises questions about the return timeline for its investments
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Ameresco’s stock price of $34.50 implies a valuation ratio of 33.9x forward P/E. Read our free research report to see why you should think twice about including AMRC in your portfolio.

Vulcan Materials (VMC)

Forward P/E Ratio: 35.2x

Founded in 1909, Vulcan Materials (NYSE: VMC) is a producer of construction aggregates, primarily crushed stone, sand, and gravel.

Why Does VMC Give Us Pause?

1. Performance surrounding its tons shipped has lagged its peers
2. Projected sales growth of 4.3% for the next 12 months suggests sluggish demand
3. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 25.2%

Vulcan Materials is trading at $319.77 per share, or 35.2x forward P/E. To fully understand why you should be careful with VMC, check out our full research report (it’s free).

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 6 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.