"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. Keeping that in mind, here are three high-flying stocks where the price is not right and some other investments you should look into instead.
Lucky Strike (LUCK)
Forward P/E Ratio: 41.8x
Born from the transformation of traditional bowling alleys into modern entertainment destinations, Lucky Strike (NYSE:LUCK) operates bowling alleys and other entertainment venues with upscale amenities, arcade games, and food and beverage services across North America.
Why Do We Pass on LUCK?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- 7× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $7.46 per share, Lucky Strike trades at 41.8x forward P/E. Check out our free in-depth research report to learn more about why LUCK doesn’t pass our bar.
Inspire Medical Systems (INSP)
Forward P/E Ratio: 71.6x
Offering an alternative for the millions who struggle with traditional CPAP machines, Inspire Medical Systems (NYSE:INSP) develops and sells an implantable neurostimulation device that treats obstructive sleep apnea by stimulating nerves to keep airways open during sleep.
Why Are We Hesitant About INSP?
- Modest revenue base of $882.6 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Low free cash flow margin of 3.7% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Negative returns on capital show that some of its growth strategies have backfired
Inspire Medical Systems is trading at $134.27 per share, or 71.6x forward P/E. If you’re considering INSP for your portfolio, see our FREE research report to learn more.
Cognex (CGNX)
Forward P/E Ratio: 34.8x
Founded in 1981 when computer vision was in its infancy, Cognex (NASDAQ:CGNX) develops machine vision systems and software that help manufacturers and logistics companies automate quality inspection and tracking of products.
Why Do We Think CGNX Will Underperform?
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 12.9 percentage points
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 10.2 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
Cognex’s stock price of $37.77 implies a valuation ratio of 34.8x forward P/E. Read our free research report to see why you should think twice about including CGNX in your portfolio.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% 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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