"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.
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 is one high-flying stock expanding its competitive advantage and two climbing an uphill battle.
Two High-Flying Stocks to Sell:
SunOpta (STKL)
Forward P/E Ratio: 31.3x
Committed to clean-label foods, SunOpta (NASDAQ: STKL) is a sustainability-focused food and beverage company specializing in the sourcing, processing, and packaging of organic products.
Why Are We Wary of STKL?
- Annual revenue declines of 4.2% over the last three years indicate problems with its market positioning
- Revenue base of $742.7 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Gross margin of 16% is an output of its commoditized products
SunOpta is trading at $6.20 per share, or 31.3x forward P/E. Read our free research report to see why you should think twice about including STKL in your portfolio.
Rush Street Interactive (RSI)
Forward P/E Ratio: 38.4x
Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE: RSI) is an operator of digital gaming platforms.
Why Does RSI Fall Short?
- Estimated sales growth of 12.5% for the next 12 months implies demand will slow from its two-year trend
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
At $12.35 per share, Rush Street Interactive trades at 38.4x forward P/E. To fully understand why you should be careful with RSI, check out our full research report (it’s free).
One High-Flying Stock to Watch:
ADP (ADP)
Forward P/E Ratio: 30.7x
Processing one out of every six paychecks in the United States, ADP (NASDAQ: ADP) provides cloud-based human capital management solutions that help businesses manage payroll, benefits, talent acquisition, and HR administration.
Why Does ADP Catch Our Eye?
- Massive revenue base of $20.2 billion makes it a well-known name that influences purchasing decisions
- Strong free cash flow margin of 18.9% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
- Improving returns on capital reflect management’s ability to monetize investments
ADP’s stock price of $323.52 implies a valuation ratio of 30.7x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
