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.
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 expanding their competitive advantages and one where the price is not right.
One High-Flying Stock to Sell:
Clarus (CLAR)
Forward P/E Ratio: 35x
Initially a financial services business, Clarus (NASDAQ: CLAR) designs, manufactures, and distributes outdoor equipment and lifestyle products.
Why Do We Avoid CLAR?
- Annual revenue declines of 2.6% over the last five years indicate problems with its market positioning
- Negative free cash flow raises questions about the return timeline for its investments
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $3.62 per share, Clarus trades at 35x forward P/E. Dive into our free research report to see why there are better opportunities than CLAR.
Two High-Flying Stocks to Buy:
KLA Corporation (KLAC)
Forward P/E Ratio: 34.1x
Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ: KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips.
Why Is KLAC a Top Pick?
- Annual revenue growth of 14.4% over the last five years was superb and indicates its market share increased during this cycle
- Excellent operating margin of 40.6% highlights the efficiency of its business model, and its rise over the last five years was fueled by some leverage on its fixed costs
- KLAC is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
KLA Corporation’s stock price of $185.97 implies a valuation ratio of 34.1x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Vita Coco (COCO)
Forward P/E Ratio: 33x
Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ: COCO) offers coconut water products that are a natural way to quench thirst.
Why Is COCO a Good Business?
- Products are selling at a rapid clip as its unit sales averaged an outstanding 15.2% growth rate over the past two years
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 42.9% over the last three years outstripped its revenue performance
- Free cash flow margin jumped by 12.9 percentage points over the last year, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Vita Coco is trading at $63.74 per share, or 33x forward P/E. Is now a good time to buy? Find out 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 Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
