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.
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 to hold for the long term and one with big downside risk.
One High-Flying Stock to Sell:
Caterpillar (CAT)
Forward P/E Ratio: 31.1x
With its iconic yellow machinery working on construction sites, Caterpillar (NYSE:CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.
Why Does CAT Give Us Pause?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.4% annually over the last two years
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Earnings per share have dipped by 2% annually over the past two years, which is concerning because stock prices follow EPS over the long term
Caterpillar is trading at $626.06 per share, or 31.1x forward P/E. To fully understand why you should be careful with CAT, check out our full research report (it’s free).
Two High-Flying Stocks to Watch:
Axon (AXON)
Forward P/E Ratio: 88x
Providing body cameras and tasers for first responders, AXON (NASDAQ:AXON) develops technology solutions and weapons products for military, law enforcement, and civilians.
Why Is AXON a Good Business?
- Products are reaching more customers as its unit sales averaged 26.3% growth over the past two years
- Operating margin improvement of 14.4 percentage points over the last five years demonstrates its ability to scale efficiently
- Earnings per share have massively outperformed its peers over the last two years, increasing by 35.2% annually
Axon’s stock price of $611.85 implies a valuation ratio of 88x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Vicor (VICR)
Forward P/E Ratio: 83.5x
Founded by a researcher at the Massachusetts Institute of Technology, Vicor (NASDAQ:VICR) provides electrical power conversion and delivery products for a range of industries.
Why Is VICR on Our Radar?
- Solid 9.9% annual revenue growth over the last five years indicates its offering’s solve complex business issues
- Additional sales over the last two years increased its profitability as the 26.1% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin expanded by 21.8 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $152.91 per share, Vicor trades at 83.5x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. 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.