Expensive stocks typically earn their valuations through superior growth rates that other companies simply can’t match. The flip side though is that these lofty expectations make them particularly susceptible to drawdowns when market sentiment shifts.
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. That said, here are two high-flying stocks with strong fundamentals and one where the price is not right.
One High-Flying Stock to Sell:
Transcat (TRNS)
Forward P/E Ratio: 53x
Serving the pharmaceutical, industrial manufacturing, energy, and chemical process industries, Transcat (NASDAQ: TRNS) provides measurement instruments and supplies.
Why Does TRNS Give Us Pause?
- Issuance of new shares over the last two years caused its earnings per share to fall by 11.1% annually while its revenue grew
- ROIC of 7.4% reflects management’s challenges in identifying attractive investment opportunities, and its falling returns suggest its earlier profit pools are drying up
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $85.87 per share, Transcat trades at 53x forward P/E. Check out our free in-depth research report to learn more about why TRNS doesn’t pass our bar.
Two High-Flying Stocks to Buy:
Bloom Energy (BE)
Forward P/E Ratio: 126.3x
Working in stealth mode for eight years, Bloom Energy (NYSE: BE) designs, manufactures, and markets solid oxide fuel cell systems for on-site power generation.
Why Do We Love BE?
- Market share has increased this cycle as its 37.6% annual revenue growth over the last two years was exceptional
- Free cash flow profile has moved into positive territory over the last five years, showing the company has crossed a key inflection point
- Historical investments are beginning to pay off as its returns on capital are growing
Bloom Energy’s stock price of $252.51 implies a valuation ratio of 126.3x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
ATI (ATI)
Forward P/E Ratio: 39.4x
With its materials flying in nearly every commercial and military aircraft in service today, ATI (NYSE: ATI) produces highly specialized materials and components for aerospace, defense, medical, and energy applications using advanced metallurgy and manufacturing processes.
Why Are We Backing ATI?
- Annual revenue growth of 11.1% over the past five years was outstanding, reflecting market share gains this cycle
- Share buybacks catapulted its annual earnings per share growth to 24.8%, which outperformed its revenue gains over the last two years
- Free cash flow margin grew by 21.7 percentage points over the last five years, giving the company more chips to play with
ATI is trading at $175.29 per share, or 39.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
