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

CAVA (CAVA)

Forward P/E Ratio: 85.1x

Starting from a single Washington, D.C. location, CAVA (NYSE: CAVA) operates a fast-casual restaurant chain offering customizable Mediterranean-inspired dishes.

Why Does CAVA Fall Short?

1. Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
2. Earnings per share have dipped by 15.6% annually over the past two years, which is concerning because stock prices follow EPS over the long term
3. Negative returns on capital show that some of its growth strategies have backfired

CAVA’s stock price of $48.63 implies a valuation ratio of 85.1x forward P/E. Check out our free in-depth research report to learn more about why CAVA doesn’t pass our bar.

Rockwell Automation (ROK)

Forward P/E Ratio: 32.9x

One of the first companies to address industrial automation, Rockwell Automation (NYSE: ROK) sells products that help customers extract more efficiency from their machinery.

Why Is ROK Not Exciting?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
3. Eroding returns on capital suggest its historical profit centers are aging

Rockwell Automation is trading at $394.55 per share, or 32.9x forward P/E. If you’re considering ROK for your portfolio, see our FREE research report to learn more.

UL Solutions (ULS)

Forward P/E Ratio: 43.7x

Founded in 1894 as a response to the growing dangers of electricity in American homes and businesses, UL Solutions (NYSE: ULS) provides testing, inspection, and certification services that help companies ensure their products meet safety, security, and sustainability standards.

Why Are We Hesitant About ULS?

1. 4.3% annual revenue growth over the last three years was slower than its business services peers
2. Earnings growth underperformed the sector average over the last two years as its EPS grew by just 9.3% annually
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $86.57 per share, UL Solutions trades at 43.7x forward P/E. Read our free research report to see why you should think twice about including ULS in your portfolio.

High-Quality Stocks for All Market Conditions

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 Growth Stocks for this month. 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 (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% 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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