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 with big downside risk.
One High-Flying Stock to Sell:
Hershey (HSY)
Forward P/E Ratio: 34.2x
Best known for its milk chocolate bar and Hershey's Kisses, Hershey (NYSE: HSY) is an iconic company known for its chocolate products.
Why Is HSY Not Exciting?
- Declining unit sales over the past two years suggest it might have to lower prices to stimulate growth
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 4.4 percentage points
- Flat earnings per share over the last three years underperformed the sector average
Hershey is trading at $194 per share, or 34.2x forward P/E. Read our free research report to see why you should think twice about including HSY in your portfolio.
Two High-Flying Stocks to Watch:
American Superconductor (AMSC)
Forward P/E Ratio: 99.1x
Founded in 1987, American Superconductor (NASDAQ: AMSC) has shifted from superconductor research to developing power systems, adapting to changing energy grid needs and naval technology requirements.
Why Is AMSC a Good Business?
- Impressive 49.8% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Free cash flow margin is now positive, indicating the company has passed a significant test
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
American Superconductor’s stock price of $56.99 implies a valuation ratio of 99.1x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
UL Solutions (ULS)
Forward P/E Ratio: 36.1x
Founded in 1894 as a response to the growing dangers of electricity in American homes and businesses, UL Solutions (NYSE: ULS) provides testing, inspection, and certification services that help companies ensure their products meet safety, security, and sustainability standards.
Why Does ULS Catch Our Eye?
- 7.2% annual revenue growth over the last two years surpassed the sector average as its services resonated with customers
- Free cash flow margin grew by 4.8 percentage points over the last five years, giving the company more chips to play with
- ROIC punches in at 27.1%, illustrating management’s expertise in identifying profitable investments
At $66.63 per share, UL Solutions trades at 36.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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 Exlservice (+354% 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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