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. Keeping that in mind, here are two high-flying stocks expanding their competitive advantages and one climbing an uphill battle.
One High-Flying Stock to Sell:
Zillow (ZG)
Forward P/E Ratio: 35.9x
Founded by Expedia co-founders Lloyd Frink and Rich Barton, Zillow (NASDAQ: ZG) is the leading U.S. online real estate marketplace.
Why Are We Out on ZG?
- Products and services have few die-hard fans as sales have declined by 7.6% annually over the last five years
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Zillow’s stock price of $67.36 implies a valuation ratio of 35.9x forward P/E. If you’re considering ZG for your portfolio, see our FREE research report to learn more.
Two High-Flying Stocks to Watch:
Roblox (RBLX)
Forward EV/EBITDA Ratio: 62x
Best known for its wide assortment of user-generated content, Roblox (NYSE: RBLX) is an online gaming platform and game creation system.
Why Should RBLX Be on Your Watchlist?
- Daily Active Users have increased by an average of 22.1% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
- Brand halo makes it a customer acquisition machine that onboards new users at scale without spending much money
- Disciplined cost controls and effective management resulted in a strong two-year EBITDA margin of 20.5%
At $105.35 per share, Roblox trades at 62x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
e.l.f. Beauty (ELF)
Forward P/E Ratio: 34.8x
Short for "eyes, lips, face", e.l.f. Beauty (NYSE: ELF) is a developer of high-quality beauty products at accessible price points.
Why Is ELF on Our Radar?
- Market share has increased over the last three years as its 49.6% annual revenue growth was exceptional
- Products command premium prices and result in a best-in-class gross margin of 71%
- Earnings growth has massively outpaced its peers over the last three years as its EPS has compounded at 58.6% annually
e.l.f. Beauty is trading at $125 per share, or 34.8x 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
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-micro-cap company Kadant (+351% 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
