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.

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. Keeping that in mind, here is one high-flying stock with strong fundamentals and two where the price is not right.

Two High-Flying Stocks to Sell:

Petco (WOOF)

Forward P/E Ratio: 54.2x

Historically known for its window displays of pets for sale or adoption, Petco (NASDAQ:WOOF) is a specialty retailer of pet food and supplies as well as a provider of services such as wellness checks and grooming.

Why Does WOOF Give Us Pause?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
2. Persistent operating losses suggest the business manages its expenses poorly
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Petco is trading at $2.57 per share, or 54.2x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than WOOF.

Live Nation (LYV)

Forward P/E Ratio: 39x

Owner of Ticketmaster and operator of music festival EDC, Live Nation (NYSE:LYV) is a company specializing in live event promotion, venue management, and ticketing services for concerts and shows.

Why Do We Think Twice About LYV?

1. Performance surrounding its events has lagged its peers
2. Subpar operating margin of 4.2% constrains its ability to invest in process improvements or effectively respond to new competitive threats
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Live Nation’s stock price of $121 implies a valuation ratio of 39x forward price-to-earnings. Check out our free in-depth research report to learn more about why LYV doesn’t pass our bar.

One High-Flying Stock to Buy:

Chipotle (CMG)

Forward P/E Ratio: 38.1x

Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE:CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.

Why Will CMG Outperform?

1. Aggressive strategy of rolling out new restaurants to gobble up whitespace is prudent given its same-store sales growth
2. Same-store sales growth averaged 7.7% over the past two years, showing it’s bringing new and repeat diners into its restaurants
3. Dominant market position is represented by its $11.31 billion in revenue and gives it fixed cost leverage when sales grow

At $50.01 per share, Chipotle trades at 38.1x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.