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. Keeping that in mind, here are two high-flying stocks expanding their competitive advantages and one where the price is not right.
One High-Flying Stock to Sell:
Allegro MicroSystems (ALGM)
Forward P/E Ratio: 42.5x
The result of a spinoff from Sanken in Japan, Allegro MicroSystems (NASDAQ: ALGM) is a designer of power management chips and distance sensors used in electric vehicles and data centers.
Why Does ALGM Fall Short?
- Annual sales declines of 11.8% for the past two years show its products and services struggled to connect with the market during this cycle
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 15.2% annually
- Low free cash flow margin of 7.9% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Allegro MicroSystems is trading at $38.85 per share, or 42.5x forward P/E. Check out our free in-depth research report to learn more about why ALGM doesn’t pass our bar.
Two High-Flying Stocks to Buy:
Howmet (HWM)
Forward P/E Ratio: 54.6x
Inventing the first forged aluminum truck wheel, Howmet (NYSE: HWM) specializes in lightweight metals engineering and manufacturing multi-material components used in vehicles.
Why Is HWM a Top Pick?
- Market share has increased this cycle as its 11.5% annual revenue growth over the last two years was exceptional
- Share repurchases over the last two years enabled its annual earnings per share growth of 42.8% to outpace its revenue gains
- Free cash flow margin increased by 12.3 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Howmet’s stock price of $260.08 implies a valuation ratio of 54.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Warby Parker (WRBY)
Forward P/E Ratio: 51.8x
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 Will WRBY Outperform?
- Aggressive expansion of new stores reflects an offensive push to quickly grow and sell in markets where it has few or no locations
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
- Earnings per share grew by 72.3% annually over the last three years, massively outpacing its peers
At $23.52 per share, Warby Parker trades at 51.8x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
