"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 is one high-flying stock with strong fundamentals and two where the price is not right.
Two High-Flying Stocks to Sell:
Hyatt Hotels (H)
Forward P/E Ratio: 45.6x
Founded in 1957, Hyatt Hotels (NYSE:H) is a global hospitality company with a portfolio of 20 premier brands and over 950 properties across 65 countries.
Why Is H Not Exciting?
- Revenue per room has disappointed over the past two years due to weaker trends in its daily rates and occupancy levels
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Negative returns on capital show that some of its growth strategies have backfired
Hyatt Hotels’s stock price of $140.69 implies a valuation ratio of 45.6x forward P/E. If you’re considering H for your portfolio, see our FREE research report to learn more.
Root (ROOT)
Forward P/B Ratio: 4.3x
Pioneering a data-driven approach that rewards good driving habits, Root (NASDAQ:ROOT) is a technology-driven auto insurance company that uses mobile apps to acquire customers and data science to price policies based on individual driving behavior.
Why Does ROOT Fall Short?
- Policy losses and capital returns have eroded its book value per share this cycle as its book value per share declined by 158% annually over the last five years
- Push for growth has led to negative returns on capital, signaling value destruction
At $90 per share, Root trades at 4.3x forward P/B. Check out our free in-depth research report to learn more about why ROOT doesn’t pass our bar.
One High-Flying Stock to Buy:
Cloudflare (NET)
Forward P/S Ratio: 29.6x
Founded by two grad students of Harvard Business School, Cloudflare (NYSE:NET) is a software-as-a-service platform that helps improve the security, reliability, and loading times of internet applications.
Why Are We Backing NET?
- Billings have averaged 30.3% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Notable projected revenue growth of 26.3% for the next 12 months hints at market share gains
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
Cloudflare is trading at $202.31 per share, or 29.6x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% 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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