"You get what you pay for" often applies to expensive stocks with best-in-class business models and execution. While their quality can sometimes justify the premium, they typically experience elevated volatility during market downturns when expectations change.
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:
Zillow (ZG)
Forward P/E Ratio: 32.9x
Founded by Expedia co-founders Lloyd Frink and Rich Barton, Zillow (NASDAQ: ZG) is the leading U.S. online real estate marketplace.
Why Do We Avoid ZG?
- Products and services aren't resonating with the market as its revenue declined by 6.6% annually over the last five years
- Poor free cash flow margin of 11.4% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Zillow is trading at $69.56 per share, or 32.9x forward P/E. To fully understand why you should be careful with ZG, check out our full research report (it’s free for active Edge members).
Two High-Flying Stocks to Watch:
Guidewire Software (GWRE)
Forward P/S Ratio: 12.2x
With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software (NYSE: GWRE) provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.
Why Are We Positive On GWRE?
- Billings have averaged 20.7% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
- Free cash flow generation is better than most peers and allows it to explore new investment opportunities
Guidewire Software’s stock price of $205.38 implies a valuation ratio of 12.2x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Quanta (PWR)
Forward P/E Ratio: 36.3x
A construction engineering services company, Quanta (NYSE: PWR) provides infrastructure solutions to a variety of sectors, including energy and communications.
Why Are We Bullish on PWR?
- Demand is greater than supply as the company’s 16.7% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Projected revenue growth of 12.8% for the next 12 months suggests its momentum from the last two years will persist
- Earnings per share have massively outperformed its peers over the last two years, increasing by 24.3% annually
At $433.03 per share, Quanta trades at 36.3x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
