Expensive stocks often command premium valuations because the market thinks their business models are exceptional. However, the downside is that high expectations are already baked into their prices, leaving little room for error if they stumble even slightly.
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. That said, here are three high-flying stocks where the price is not right and some other investments you should look into instead.
nLIGHT (LASR)
Forward P/E Ratio: 215.6x
Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ: LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.
Why Do We Think Twice About LASR?
- Sales trends were unexciting over the last five years as its 3.2% annual growth was below the typical industrials company
- Cash-burning history makes us doubt the long-term viability of its business model
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
nLIGHT’s stock price of $67.09 implies a valuation ratio of 215.6x forward P/E. Dive into our free research report to see why there are better opportunities than LASR.
Clean Harbors (CLH)
Forward P/E Ratio: 35.1x
Established in 1980, Clean Harbors (NYSE: CLH) provides environmental and industrial services like hazardous and non-hazardous waste disposal and emergency spill cleanups.
Why Does CLH Worry Us?
- Sales trends were unexciting over the last two years as its 5.6% annual growth was below the typical industrials company
- Estimated sales growth of 3.7% for the next 12 months implies demand will slow from its two-year trend
- Earnings per share lagged its peers over the last two years as they only grew by 2.8% annually
Clean Harbors is trading at $275.77 per share, or 35.1x forward P/E. Read our free research report to see why you should think twice about including CLH in your portfolio.
Sunrun (RUN)
Forward P/E Ratio: 45.3x
Helping homeowners use solar energy to power their homes, Sunrun (NASDAQ: RUN) provides residential solar electricity, specializing in panel installation and leasing services.
Why Does RUN Give Us Pause?
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Cash burn makes us question whether it can achieve sustainable long-term growth
At $12.35 per share, Sunrun trades at 45.3x forward P/E. If you’re considering RUN for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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