Expensive stocks often command premium valuations because the market thinks their business models are exceptional. However, the downside is that high expectations are already baked into their prices, leaving little room for error if they stumble even slightly.

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 expanding their competitive advantages and one where the price is not right.

One High-Flying Stock to Sell:

Watsco (WSO)

Forward P/E Ratio: 31.9x

Originally a manufacturing company, Watsco (NYSE: WSO) today only distributes air conditioning, heating, and refrigeration equipment, as well as related parts and supplies.

Why Is WSO Not Exciting?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
2. Earnings per share fell by 4.1% annually over the last two years while its revenue grew, partly because it diluted shareholders
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Watsco is trading at $476.29 per share, or 31.9x forward P/E. Read our free research report to see why you should think twice about including WSO in your portfolio.

Two High-Flying Stocks to Watch:

RBC Bearings (RBC)

Forward P/E Ratio: 34.6x

With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.

Why Should RBC Be on Your Watchlist?

1. Market share has increased this cycle as its 17.6% annual revenue growth over the last five years was exceptional
2. Highly efficient business model is illustrated by its impressive 19.9% operating margin, and its operating leverage amplified its profits over the last five years
3. Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 20.5% annually

RBC Bearings’s stock price of $378.91 implies a valuation ratio of 34.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

Warby Parker (WRBY)

Forward P/E Ratio: 59.3x

Founded in 2010, Warby Parker (NYSE: WRBY) designs, manufactures, and sells eyewear, including prescription glasses, sunglasses, and contact lenses, through its e-commerce platform and physical retail locations.

Why Could WRBY Be a Winner?

1. Aggressive expansion of new stores reflects an offensive push to quickly grow and sell in markets where it has few or no locations
2. Differentiated product assortment results in a best-in-class gross margin of 55.1%
3. Earnings per share grew by 62.4% annually over the last three years, massively outpacing its peers

At $22.21 per share, Warby Parker trades at 59.3x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. 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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