"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.
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 three high-flying stocks climbing an uphill battle and some alternatives you should consider instead.
Smith & Wesson (SWBI)
Forward P/E Ratio: 36.4x
With a history dating back to 1852, Smith & Wesson (NASDAQ:SWBI) is a firearms manufacturer known for its handguns and rifles.
Why Do We Think SWBI Will Underperform?
- Sales tumbled by 10.2% annually over the last five years, showing consumer trends are working against its favor
- Poor free cash flow margin of 2.1% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Smith & Wesson’s stock price of $10.10 implies a valuation ratio of 36.4x forward P/E. To fully understand why you should be careful with SWBI, check out our full research report (it’s free for active Edge members).
Quest Resource (QRHC)
Forward P/E Ratio: 48.3x
Recycling corporate waste to help companies be more sustainable, Quest Resource (NASDAQ:QRHC) is a provider of waste and recycling services.
Why Do We Steer Clear of QRHC?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 3.6% annually over the last two years
- 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 shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Quest Resource is trading at $2.02 per share, or 48.3x forward P/E. Dive into our free research report to see why there are better opportunities than QRHC.
Orion (ORN)
Forward P/E Ratio: 40.9x
Established in 1994, Orion (NYSE:ORN) provides construction services for marine infrastructure and industrial projects.
Why Is ORN Risky?
- Demand cratered as it couldn’t win new orders over the past two years, leading to an average 1.7% decline in its backlog
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 3.8% annually
- Low free cash flow margin of -0.7% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
At $10.48 per share, Orion trades at 40.9x forward P/E. If you’re considering ORN for your portfolio, see our FREE research report to learn more.
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 9 Market-Beating Stocks. 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-small-cap company Exlservice (+354% 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.