2 High-Flying Stocks with Solid Fundamentals and 1 to Steer Clear Of

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 are two high-flying stocks expanding their competitive advantages and one climbing an uphill battle.

One High-Flying Stock to Sell:

Rockwell Automation (ROK)

Forward P/E Ratio: 34.3x

One of the first companies to address industrial automation, Rockwell Automation (NYSE:ROK) sells products that help customers extract more efficiency from their machinery.

Why Do We Pass on ROK?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Rockwell Automation is trading at $343 per share, or 34.3x forward P/E. Read our free research report to see why you should think twice about including ROK in your portfolio.

Two High-Flying Stocks to Watch:

Robinhood (HOOD)

Forward EV/EBITDA Ratio: 45.4x

With a mission to democratize finance, Robinhood (NASDAQ:HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.

Why Is HOOD a Good Business?

1. Customer spending is rising as the company has focused on monetization over the last two years, leading to 43.1% annual growth in its average revenue per user
2. Incremental sales over the last three years have been highly profitable as its earnings per share increased by 64.6% annually, topping its revenue gains
3. Free cash flow margin jumped significantly over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

At $99.25 per share, Robinhood trades at 45.4x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.

Impinj (PI)

Forward P/E Ratio: 70.3x

Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ:PI) is a maker of radio-frequency identification (RFID) hardware and software.

Why Should PI Be on Your Watchlist?

1. Market share has increased this cycle as its 11.9% annual revenue growth over the last two years was exceptional
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 38.1% over the last five years outstripped its revenue performance
3. Free cash flow margin increased by 23.7 percentage points over the last five years, giving the company more capital to invest or return to shareholders

Impinj’s stock price of $112 implies a valuation ratio of 70.3x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking 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 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free.

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