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. Keeping that in mind, here is one high-flying stock with strong fundamentals and two with big downside risk.
Two High-Flying Stocks to Sell:
Saia (SAIA)
Forward P/E Ratio: 29x
Pivoting its business model after realizing there was more success in delivering produce than selling it, Saia (NASDAQ:SAIA) is a provider of freight transportation solutions.
Why Is SAIA Not Exciting?
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 7.3% annually while its revenue grew
- Free cash flow margin dropped by 9.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Saia’s stock price of $300.22 implies a valuation ratio of 29x forward P/E. Dive into our free research report to see why there are better opportunities than SAIA.
Vicor (VICR)
Forward P/E Ratio: 35.5x
Founded by a researcher at the Massachusetts Institute of Technology, Vicor (NASDAQ:VICR) provides electrical power conversion and delivery products for a range of industries.
Why Does VICR Worry Us?
- Flat backlog over the past two years has disappointed and shows fewer customers signed long-term contracts
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 10.9 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
Vicor is trading at $44.40 per share, or 35.5x forward P/E. To fully understand why you should be careful with VICR, check out our full research report (it’s free).
One High-Flying Stock to Watch:
Snowflake (SNOW)
Forward P/S Ratio: 15.6x
Founded in 2013 by three French engineers who spent decades working for Oracle, Snowflake (NYSE:SNOW) provides a data warehouse-as-a-service in the cloud that allows companies to store large amounts of data and analyze it in real time.
Why Do We Watch SNOW?
- Billings have averaged 26.5% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Customers use its software daily and increase their spending every year, as seen in its 126% net revenue retention rate
- Market share will likely rise over the next 12 months as its expected revenue growth of 24.4% is robust
At $223.40 per share, Snowflake trades at 15.6x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 9 Market-Beating Stocks. 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-small-cap company Comfort Systems (+782% 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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