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. That said, here are three high-flying stocks with big downside risk and some other investments you should consider instead.
E.W. Scripps (SSP)
Forward P/E Ratio: 286x
Founded as a chain of daily newspapers, E.W. Scripps (NASDAQ:SSP) is a diversified media enterprise operating a range of local television stations, national networks, and digital media platforms.
Why Do We Steer Clear of SSP?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $2.79 per share, E.W. Scripps trades at 286x forward P/E. Check out our free in-depth research report to learn more about why SSP doesn’t pass our bar.
Lovesac (LOVE)
Forward P/E Ratio: 109.3x
Known for its oversized, premium beanbags, Lovesac (NASDAQ:LOVE) is a specialty furniture brand selling modular furniture.
Why Are We Out on LOVE?
- Annual revenue growth of 12.3% over the last five years was below our standards for the consumer discretionary sector
- Low free cash flow margin of 2.5% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Lovesac is trading at $14.54 per share, or 109.3x forward P/E. To fully understand why you should be careful with LOVE, check out our full research report (it’s free).
Lindblad Expeditions (LIND)
Forward P/E Ratio: 124.4x
Founded by explorer Sven-Olof Lindblad in 1979, Lindblad Expeditions (NASDAQ:LIND) offers cruising experiences to remote destinations in partnership with National Geographic.
Why Do We Avoid LIND?
- Sales trends were unexciting over the last two years as its 18.5% annual growth was below the typical consumer discretionary company
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 5 percentage points over the next year
Lindblad Expeditions’s stock price of $36.24 implies a valuation ratio of 124.4x forward P/E. If you’re considering LIND for your portfolio, see our FREE research report to learn more.
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.
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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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.