"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.
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 with strong fundamentals and two where the price is not right.
Two High-Flying Stocks to Sell:
Analog Devices (ADI)
Forward P/E Ratio: 32.2x
Founded by two MIT graduates, Ray Stata and Matthew Lorber in 1965, Analog Devices (NASDAQ:ADI) is one of the largest providers of high performance analog integrated circuits used mainly in industrial end markets, along with communications, autos, and consumer devices.
Why Are We Cautious About ADI?
- Sales tumbled by 5.4% annually over the last two years, showing market trends are working against its favor during this cycle
- Underwhelming 5.9% return on capital reflects management’s difficulties in finding profitable growth opportunities
Analog Devices is trading at $320.19 per share, or 32.2x forward P/E. If you’re considering ADI for your portfolio, see our FREE research report to learn more.
Power Integrations (POWI)
Forward P/E Ratio: 36.1x
A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ:POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.
Why Do We Think POWI Will Underperform?
- Annual sales declines of 1.9% for the past five years show its products and services struggled to connect with the market during this cycle
- Inability to adjust its cost structure while its revenue declined over the last five years led to a 22.6 percentage point drop in the company’s operating margin
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
Power Integrations’s stock price of $47.14 implies a valuation ratio of 36.1x forward P/E. Read our free research report to see why you should think twice about including POWI in your portfolio.
One High-Flying Stock to Buy:
Graham Corporation (GHM)
Forward P/E Ratio: 41.2x
Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.
Why Should You Buy GHM?
- Average backlog growth of 27.8% over the past two years shows it has a steady sales pipeline that will drive future orders
- Earnings growth has massively outpaced its peers over the last one years as its EPS has compounded at 83.3% annually
- Free cash flow margin expanded by 15.4 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $83.18 per share, Graham Corporation trades at 41.2x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.