Expensive stocks typically earn their valuations through superior growth rates that other companies simply can’t match. The flip side though is that these lofty expectations make them particularly susceptible to drawdowns when market sentiment shifts.
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 is one high-flying stock to hold for the long term and two with big downside risk.
Two High-Flying Stocks to Sell:
Illumina (ILMN)
Forward P/E Ratio: 35.1x
Pioneering the ability to read the human genome at unprecedented speed and affordability, Illumina (NASDAQ: ILMN) develops and sells advanced DNA sequencing and microarray technologies that allow researchers and clinicians to analyze genetic variations and functions.
Why Do We Think Twice About ILMN?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Low returns on capital reflect management’s struggle to allocate funds effectively
Illumina is trading at $188.70 per share, or 35.1x forward P/E. To fully understand why you should be careful with ILMN, check out our full research report (it’s free).
Liberty Energy (LBRT)
Forward P/E Ratio: 89.3x
Operating approximately 40 active fleets across North America's most productive shale basins, Liberty Energy (NYSE: LBRT) provides hydraulic fracturing services that help oil and gas companies extract resources from shale formations.
Why Does LBRT Fall Short?
- Gross margin of 23.3% reflects its high production costs and unfavorable asset base
- Low free cash flow margin of 2.3% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
At $23.50 per share, Liberty Energy trades at 89.3x forward P/E. Check out our free in-depth research report to learn more about why LBRT doesn’t pass our bar.
One High-Flying Stock to Watch:
Vitesse Energy (VTS)
Forward P/E Ratio: 31x
Taking a hands-off approach to energy production, Vitesse Energy (NYSE: VTS) owns non-operated stakes in oil and natural gas wells primarily in North Dakota and Montana's Williston Basin.
Why Is VTS on Our Radar?
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 80%
- VTS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Vitesse Energy’s stock price of $15.48 implies a valuation ratio of 31x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
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.
