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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.
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 is one high-flying stock to hold for the long term and two where the price is not right.
Two High-Flying Stocks to Sell:
Lucky Strike (LUCK)
Forward P/E Ratio: 27.7x
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 Are We Hesitant About LUCK?
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Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
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Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
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Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Lucky Strike is trading at $8.31 per share, or 27.7x forward P/E. Dive into our free research report to see why there are better opportunities than LUCK.
Repligen (RGEN)
Forward P/E Ratio: 69.2x
With over 13 strategic acquisitions since 2012 to build its comprehensive bioprocessing portfolio, Repligen (NASDAQ:RGEN) develops and manufactures specialized technologies that improve the efficiency and flexibility of biological drug manufacturing processes.
Why Should You Sell RGEN?
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Customers postponed purchases of its products and services this cycle as its revenue declined by 7.5% annually over the last two years
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Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
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Efficiency has decreased over the last five years as its adjusted operating margin fell by 14.8 percentage points
At $126.89 per share, Repligen trades at 69.2x forward P/E. Check out our free in-depth research report to learn more about why RGEN doesn’t pass our bar.
One High-Flying Stock to Buy:
ServiceNow (NOW)
Forward P/S Ratio: 15x
Founded by Fred Luddy, who coded the company's initial prototype on a flight from San Francisco to London, ServiceNow (NYSE:NOW) is a software provider helping companies automate workflows across IT, HR, and customer service.