“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 with strong fundamentals and two facing an uphill battle.
Two High-Flying Stocks to Sell:
Freshpet (FRPT)
Forward P/E Ratio: 36.3x
Standing out from typical processed pet foods, Freshpet (NASDAQ:FRPT) is a pet food company whose product portfolio includes natural meals and treats for dogs and cats.
Why Are We Hesitant About FRPT?
- Subscale operations are evident in its revenue base of $1.18 billion, meaning it has fewer distribution channels than its larger rivals
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.4% for the last two years
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Freshpet’s stock price of $61.32 implies a valuation ratio of 36.3x forward P/E. If you’re considering FRPT for your portfolio, see our FREE research report to learn more.
AMN Healthcare Services (AMN)
Forward P/E Ratio: 43.2x
With a network of thousands of healthcare professionals ranging from nurses to physicians to executives, AMN Healthcare (NYSE:AMN) provides healthcare workforce solutions including temporary staffing, permanent placement, and technology platforms for hospitals and healthcare facilities across the United States.
Why Does AMN Give Us Pause?
- Declining travelers on assignment over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Earnings per share have dipped by 7.6% annually over the past five years, which is concerning because stock prices follow EPS over the long term
- Waning returns on capital imply its previous profit engines are losing steam
AMN Healthcare Services is trading at $36.30 per share, or 43.2x forward P/E. To fully understand why you should be careful with AMN, check out our full research report (it’s free).
One High-Flying Stock to Watch:
Apple (AAPL)
Forward P/E Ratio: 36.3x
Creator of the iPhone and App Store, Apple (NASDAQ:AAPL) is a legendary developer of consumer electronics and software.
Why Do We Watch AAPL?
- Apple’s revenue base is so large because nearly everyone in the U.S. has an iPhone, but this is a double-edged sword. Growth must now come from upgrades, a harder pitch that has resulted in sluggish top-line performance recently.
- Still, Apple’s devices have endured for decades, speaking to its brand, design ethos, and technological chops. Its success is rare in the world of consumer electronics, which is fraught because of commoditization, competition, and obsolescence risk.
- The company may not have the best gross margin because of its hardware orientation, but it still manages to produce elite operating and free cash flow margins. This shows it doesn’t need over-the-top marketing campaigns to convince people to buy its products.
At $332.81 per share, Apple trades at 36.3x forward price-to-earnings. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.