"You get what you pay for" often applies to expensive stocks with best-in-class business models and execution. While their quality can sometimes justify the premium, they typically experience elevated volatility during market downturns when expectations change.
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. That said, here are three high-flying stocks where the price is not right and some other investments you should look into instead.
Planet Fitness (PLNT)
Forward P/E Ratio: 36.5x
Founded by two brothers who purchased a struggling gym, Planet Fitness (NYSE: PLNT) is a gym franchise that caters to casual fitness users by providing a friendly and inclusive atmosphere.
Why Are We Cautious About PLNT?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its stores
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 5.5 percentage points
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
Planet Fitness’s stock price of $109.25 implies a valuation ratio of 36.5x forward P/E. If you’re considering PLNT for your portfolio, see our FREE research report to learn more.
VSE Corporation (VSEC)
Forward P/E Ratio: 34.5x
With roots dating back to 1959 and a strategic focus on extending the life of transportation assets, VSE Corporation (NASDAQ: VSEC) provides aftermarket parts distribution and maintenance, repair, and overhaul services for aircraft and vehicle fleets in commercial and government markets.
Why Does VSEC Give Us Pause?
- High input costs result in an inferior gross margin of 12.3% that must be offset through higher volumes
- Negative free cash flow raises questions about the return timeline for its investments
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $126.67 per share, VSE Corporation trades at 34.5x forward P/E. Check out our free in-depth research report to learn more about why VSEC doesn’t pass our bar.
Corcept (CORT)
Forward P/E Ratio: 35.6x
Focusing on the powerful stress hormone that affects everything from metabolism to immune function, Corcept Therapeutics (NASDAQ: CORT) develops and markets medications that modulate cortisol to treat endocrine disorders, cancer, and neurological diseases.
Why Does CORT Fall Short?
- Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 16.2 percentage points
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 3% annually
- Free cash flow margin shrank by 16.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Corcept is trading at $69 per share, or 35.6x forward P/E. Read our free research report to see why you should think twice about including CORT in your portfolio.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking 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 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-small-cap company Comfort Systems (+782% 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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