With the S&P 500 rising 23% last year, many stocks are trading at valuations that are simply too difficult to justify. For this reason, it may be wise for investors to closely examine every stock's valuation before investing in 2025. With this said, not all companies' shares look overvalued today.

One investment that may be worth considering at its current price is Vail Resorts (MTN 1.72%). While major stock market indices rose sharply over the last year, shares of the leading mountain resort operator actually declined. Sure, the company seems to be going through a bit of a rough patch. But the stock's recent beating may have gone too far. Opportunistic investors, therefore, may want to consider buying the dip in this high-quality company's stock.

Understanding Vail's headwinds

There's a long list of reasons for Vail stock's recent pullback. Some of the most prominent bear arguments for the stock include concerns about global warming, business transformation efforts taking longer than expected to pay off in meaningful growth, accelerated capital investment to improve the guest experience, and significant wage increases.

Combined with significant weather challenges that lasted for a large portion of the ski season in fiscal 2024, these challenges are a recipe for a tough operating environment for Vail. Sales growth over the past four quarters has largely flatlined. Meanwhile, profitability has been held back by a step-up in both expenses and capital expenditures.

Why now may be a good time to buy

Despite the headwinds Vail is facing today, investors shouldn't forget just how iconic the company's assets are. As the owner of Vail, Breckenridge, Whistler Blackcomb, and a number of other ski resorts, it's nearly impossible for a new competitor to rise up and take market share from Vail. As the company noted in a March presentation to investors, there haven't been any new mountain resorts of scale in more than 40 years. The company's owned and operated integrated network of resorts, therefore, gives the company one of the most durable competitive advantages in business.

Historically, Vail's power position in the travel and leisure industry has been evident in consistent and substantial price increases. Recently, however, this competitive advantage has been masked by a fiscal 2022 pricing "reset" in which the company slashed by about 20% as part of a broader restructuring in how passes are sold. Since then, however, price increases have resumed and should begin contributing to this next phase of Vail's growth story.

While the company's growth efforts need more time to build meaningful momentum, it may make since to buy the stock before the company's return to robust business growth is realized. By then, the stock could be pricier. Today, investors get access to a compelling dividend yield of nearly 4.7% -- a nice payout to help compensate them for the risk they are taking on by owning the stock. Even more, Vail has been returning capital to shareholders indirectly through a share repurchase program. It repurchased about 100,000 shares in its most recent quarter and the company's board of directors has authorized Vail to buy back up to 1.6 million more of its shares.

Though the stock's price-to-earnings multiple of about 30 seems high, you could argue that this multiple is temporarily inflated because earnings are suppressed by a period of high spending during a transformational phase for the ski resort operator. Vail's earnings could grow faster than revenue in the years ahead as capital expenditures hopefully normalize over time and as the company's investments in its next phase of growth potentially begin paying off in higher revenue growth rates. Sure, there's a risk that the company's transformation efforts won't generate the results management expects. But given the quality of Vail's assets and the durability of its business model, this may be a risk worth taking.