"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. Keeping that in mind, here is one high-flying stock to hold for the long term and two climbing an uphill battle.
Two High-Flying Stocks to Sell:
FormFactor (FORM)
Forward P/E Ratio: 45.3x
With customers across the foundry and fabless markets, FormFactor (NASDAQ:FORM) is a US-based provider of test and measurement technologies for semiconductors.
Why Do We Think Twice About FORM?
- Sales trends were unexciting over the last five years as its 2.5% annual growth was below the typical semiconductor company
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 2.8% annually while its revenue grew
- Investment activity picked up over the last five years, pressuring its weak free cash flow margin of 5.9%
At $90.81 per share, FormFactor trades at 45.3x forward P/E. Check out our free in-depth research report to learn more about why FORM doesn’t pass our bar.
Novanta (NOVT)
Forward P/E Ratio: 37.8x
Originally a pioneer in the laser scanning industry during the late 1960s, Novanta (NASDAQ:NOVT) offers medicine and manufacturing technology to the medical, life sciences, and manufacturing industries.
Why Are We Hesitant About NOVT?
- Muted 4% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Flat earnings per share over the last two years underperformed the sector average
- 3.7 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Novanta’s stock price of $141.45 implies a valuation ratio of 37.8x forward P/E. To fully understand why you should be careful with NOVT, check out our full research report (it’s free).
One High-Flying Stock to Buy:
DexCom (DXCM)
Forward P/E Ratio: 29x
Founded in 1999 and receiving its first FDA approval in 2006, DexCom (NASDAQ:DXCM) develops and sells continuous glucose monitoring systems that allow people with diabetes to track their blood sugar levels without repeated finger pricks.
Why Should You Buy DXCM?
- Average organic revenue growth of 14.4% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 17.5% annually
- Free cash flow margin expanded by 17.5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
DexCom is trading at $69.88 per share, or 29x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.