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. Keeping that in mind, here are two high-flying stocks with strong fundamentals and one where the price is not right.
One High-Flying Stock to Sell:
FormFactor (FORM)
Forward P/E Ratio: 40.9x
With customers across the foundry and fabless markets, FormFactor (NASDAQ: FORM) is a US-based provider of test and measurement technologies for semiconductors.
Why Are We Cautious About FORM?
- Annual revenue growth of 3.8% over the last five years was below our standards for the semiconductor sector
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 42.8%
- Low free cash flow margin of 8.4% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
At $139.67 per share, FormFactor trades at 40.9x forward P/E. To fully understand why you should be careful with FORM, check out our full research report (it’s free).
Two High-Flying Stocks to Watch:
Coherent (COHR)
Forward P/E Ratio: 36.1x
Created through the 2022 rebranding of II-VI Incorporated, a company with roots dating back to 1971, Coherent (NYSE: COHR) develops and manufactures advanced materials, lasers, and optical components for applications ranging from telecommunications to industrial manufacturing.
Why Will COHR Beat the Market?
- Market share has increased this cycle as its 23% annual revenue growth over the last two years was exceptional
- Market share is on track to rise over the next 12 months as its 49.4% projected revenue growth implies demand will accelerate from its two-year trend
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 83.7% annually
Coherent’s stock price of $333.95 implies a valuation ratio of 36.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Noble Corporation (NE)
Forward P/E Ratio: 52.5x
With origins dating back over a century to 1921, Noble Corporation (NYSE: NE) operates drilling rigs that oil and gas companies charter to drill wells in deep ocean waters and shallow seas.
Why Do We Watch NE?
- Annual revenue growth of 29.7% over the past five years was outstanding, reflecting market share gains this cycle
- Economies of scale give it some operating leverage when demand rises
- EBITDA margin improvement of 15.1 percentage points over the last five years demonstrates its ability to scale efficiently
Noble Corporation is trading at $40.97 per share, or 52.5x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
