1 High-Flying Stock to Own for Decades and 2 We Avoid

Expensive stocks often command premium valuations because the market thinks their business models are exceptional. However, the downside is that high expectations are already baked into their prices, leaving little room for error if they stumble even slightly.

Finding the right balance between price and quality can challenge even the most skilled investors. Luckily for you, we started StockStory to help you identify the real opportunities. Keeping that in mind, here is one high-flying stock with strong fundamentals and two climbing an uphill battle.

Two High-Flying Stocks to Sell:

Starbucks (SBUX)

Forward P/E Ratio: 30.4x

Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.

Why Are We Wary of SBUX?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 5.1 percentage points
3. Incremental sales over the last six years were much less profitable as its earnings per share fell by 2.2% annually while its revenue grew

Starbucks’s stock price of $82.40 implies a valuation ratio of 30.4x forward P/E. Dive into our free research report to see why there are better opportunities than SBUX.

Napco (NSSC)

Forward P/E Ratio: 34.9x

Protecting everything from schools to government facilities since 1969, Napco Security Technologies (NASDAQ:NSSC) manufactures electronic security devices, access control systems, and communication services for intrusion and fire alarm systems.

Why Are We Hesitant About NSSC?

1. Muted 3.4% annual revenue growth over the last two years shows its demand lagged behind its business services peers
2. Subscale operations are evident in its revenue base of $181.6 million, meaning it has fewer distribution channels than its larger rivals
3. Projected sales growth of 3.1% for the next 12 months suggests sluggish demand

Napco is trading at $41.53 per share, or 34.9x forward P/E. To fully understand why you should be careful with NSSC, check out our full research report (it’s free).

One High-Flying Stock to Buy:

Monolithic Power Systems (MPWR)

Forward P/E Ratio: 47.1x

Founded in 1997 by its longtime CEO Michael Hsing, Monolithic Power Systems (NASDAQ:MPWR) is an analog and mixed signal chipmaker that specializes in power management chips meant to minimize total energy consumption.

Why Is MPWR a Top Pick?

1. Impressive 17.3% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
3. Industry-leading 45.9% return on capital demonstrates management’s skill in finding high-return investments

At $839.68 per share, Monolithic Power Systems trades at 47.1x 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

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - 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 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-micro-cap company Kadant (+351% 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

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