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.
Finding the right balance between price and quality can challenge even the most skilled investors. Luckily for you, we started StockStory to help you identify the real opportunities. That said, here are two high-flying stocks with strong fundamentals and one with big downside risk.
One High-Flying Stock to Sell:
Werner (WERN)
Forward P/E Ratio: 33.7x
Conducting business in over a 100 countries, Werner (NASDAQ: WERN) offers full-truckload, less-than-truckload, and intermodal delivery services.
Why Do We Pass on WERN?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 5.7% annually over the last two years
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 37.2% annually
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Werner is trading at $26.60 per share, or 33.7x forward P/E. Read our free research report to see why you should think twice about including WERN in your portfolio.
Two High-Flying Stocks to Buy:
Broadcom (AVGO)
Forward P/E Ratio: 42.1x
Originally the semiconductor division of Hewlett Packard, Broadcom (NASDAQ: AVGO) is a semiconductor conglomerate spanning wireless communications, networking, and data storage as well as infrastructure software focused on mainframes and cybersecurity.
Why Is AVGO a Good Business?
- Impressive 27.6% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 75.8%
- Robust free cash flow margin of 41.3% gives it many options for capital deployment
At $305.61 per share, Broadcom trades at 42.1x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Reddit (RDDT)
Forward EV/EBITDA Ratio: 56.3x
Founded in 2005 by two University of Virginia roommates, Reddit (NYSE: RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.
Why Are We Backing RDDT?
- Domestic Daily Active Visitors have grown by 33.7% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Earnings growth has trumped its peers over the last three years as its EPS has compounded at 38.6% annually
- Free cash flow margin grew by 35.1 percentage points over the last few years, giving the company more chips to play with
Reddit’s stock price of $216 implies a valuation ratio of 56.3x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, 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 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-micro-cap company Tecnoglass (+1,754% 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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