3 High-Flying Stocks We Think Twice About

"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. Keeping that in mind, here are three high-flying stocks with big downside risk and some other investments you should consider instead.

Himax (HIMX)

Forward P/E Ratio: 29.7x

Taiwan-based Himax Technologies (NASDAQ:HIMX) is a leading manufacturer of display driver chips and timing controllers used in TVs, laptops, and mobile phones.

Why Should You Dump HIMX?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 4.2% annually over the last five years
2. Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
3. High net-debt-to-EBITDA ratio of 8× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Himax is trading at $18.41 per share, or 29.7x forward P/E. Check out our free in-depth research report to learn more about why HIMX doesn’t pass our bar.

Walmart (WMT)

Forward P/E Ratio: 44.8x

Known for its large-format Supercenters, Walmart (NASDAQ:WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.

Why Are We Cautious About WMT?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 5.3% for the last three years
2. Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 24.9%
3. Subpar operating margin of 4.3% constrains its ability to invest in process improvements or effectively respond to new competitive threats

At $130.43 per share, Walmart trades at 44.8x forward P/E. To fully understand why you should be careful with WMT, check out our full research report (it’s free).

Corcept (CORT)

Forward P/E Ratio: 79.4x

Focusing on the powerful stress hormone that affects everything from metabolism to immune function, Corcept Therapeutics (NASDAQ:CORT) develops and markets medications that modulate cortisol to treat endocrine disorders, cancer, and neurological diseases.

Why Is CORT Not Exciting?

1. Incremental sales over the last five years were much less profitable as its earnings per share fell by 19.4% annually while its revenue grew
2. Free cash flow margin dropped by 31 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Eroding returns on capital suggest its historical profit centers are aging

Corcept’s stock price of $51.50 implies a valuation ratio of 79.4x forward P/E. Check out our free in-depth research report to learn more about why CORT doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.

Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.

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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.