1 High-Flying Stock on Our Buy List and 2 We Ignore

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 with big downside risk.

Two High-Flying Stocks to Sell:

Microchip Technology (MCHP)

Forward P/E Ratio: 36.1x

Spun out from General Instrument in 1987, Microchip Technology (NASDAQ: MCHP) is a leading provider of microcontrollers and integrated circuits used mainly in the automotive world, especially in electric vehicles and their charging devices.

Why Do We Steer Clear of MCHP?

1. Sales tumbled by 4.2% annually over the last five years, showing market trends are working against its favor during this cycle
2. Sales were less profitable over the last five years as its earnings per share fell by 20.6% annually, worse than its revenue declines
3. Free cash flow margin shrank by 14.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

Microchip Technology is trading at $73.52 per share, or 36.1x forward P/E. If you’re considering MCHP for your portfolio, see our FREE research report to learn more.

nLIGHT (LASR)

Forward P/E Ratio: 137.5x

Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ:LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.

Why Do We Think LASR Will Underperform?

1. Muted 2.6% annual revenue growth over the last five years shows its demand lagged behind its industrials peers
2. Long-term business health is up for debate as its cash burn has increased over the last five years
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

nLIGHT’s stock price of $40.22 implies a valuation ratio of 137.5x forward P/E. Read our free research report to see why you should think twice about including LASR in your portfolio.

One High-Flying Stock to Buy:

CECO Environmental (CECO)

Forward P/E Ratio: 45.2x

With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ:CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors.

Why Do We Love CECO?

1. Impressive 19% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Adjusted operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
3. Historical investments are beginning to pay off as its returns on capital are growing

At $61.17 per share, CECO Environmental trades at 45.2x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. 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.