ETFOptimize | High-performance ETF-based Investment Strategies

Quantitative strategies, Wall Street-caliber research, and insightful market analysis since 1998.


ETFOptimize | HOME
Close Window

2 High-Flying Stocks with Solid Fundamentals and 1 to Steer Clear Of

HOOD Cover Image

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.

Separating true intrinsic value from speculation isn’t easy, especially during bull markets. That’s where StockStory comes in - to help you find high-quality companies that will stand the test of time. That said, here are two high-flying stocks expanding their competitive advantages and one climbing an uphill battle.

One High-Flying Stock to Sell:

Rockwell Automation (ROK)

Forward P/E Ratio: 34.3x

One of the first companies to address industrial automation, Rockwell Automation (NYSE: ROK) sells products that help customers extract more efficiency from their machinery.

Why Do We Pass on ROK?

  1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
  2. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
  3. Diminishing returns on capital suggest its earlier profit pools are drying up

Rockwell Automation is trading at $343 per share, or 34.3x forward P/E. Read our free research report to see why you should think twice about including ROK in your portfolio.

Two High-Flying Stocks to Watch:

Robinhood (HOOD)

Forward EV/EBITDA Ratio: 45.4x

With a mission to democratize finance, Robinhood (NASDAQ: HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.

Why Is HOOD a Good Business?

  1. Customer spending is rising as the company has focused on monetization over the last two years, leading to 43.1% annual growth in its average revenue per user
  2. Incremental sales over the last three years have been highly profitable as its earnings per share increased by 64.6% annually, topping its revenue gains
  3. Free cash flow margin jumped significantly over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

At $99.25 per share, Robinhood trades at 45.4x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.

Impinj (PI)

Forward P/E Ratio: 70.3x

Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ: PI) is a maker of radio-frequency identification (RFID) hardware and software.

Why Should PI Be on Your Watchlist?

  1. Market share has increased this cycle as its 11.9% annual revenue growth over the last two years was exceptional
  2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 38.1% over the last five years outstripped its revenue performance
  3. Free cash flow margin increased by 23.7 percentage points over the last five years, giving the company more capital to invest or return to shareholders

Impinj’s stock price of $112 implies a valuation ratio of 70.3x 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 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.

Stock Quote API & Stock News API supplied by www.cloudquote.io
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms Of Service.


 

IntelligentValue Home
Close Window

DISCLAIMER

All content herein is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor should it be interpreted as a recommendation to buy, hold or sell (short or otherwise) any security.  All opinions, analyses, and information included herein are based on sources believed to be reliable, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. We undertake no obligation to update such opinions, analysis or information. You should independently verify all information contained on this website. Some information is based on analysis of past performance or hypothetical performance results, which have inherent limitations. We make no representation that any particular equity or strategy will or is likely to achieve profits or losses similar to those shown. Shareholders, employees, writers, contractors, and affiliates associated with ETFOptimize.com may have ownership positions in the securities that are mentioned. If you are not sure if ETFs, algorithmic investing, or a particular investment is right for you, you are urged to consult with a Registered Investment Advisor (RIA). Neither this website nor anyone associated with producing its content are Registered Investment Advisors, and no attempt is made herein to substitute for personalized, professional investment advice. Neither ETFOptimize.com, Global Alpha Investments, Inc., nor its employees, service providers, associates, or affiliates are responsible for any investment losses you may incur as a result of using the information provided herein. Remember that past investment returns may not be indicative of future returns.

Copyright © 1998-2017 ETFOptimize.com, a publication of Optimized Investments, Inc. All rights reserved.