2 High-Flying Stocks with Exciting Potential and 1 We Find Risky

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 are two high-flying stocks with strong fundamentals and one with big downside risk.

One High-Flying Stock to Sell:

Shake Shack (SHAK)

Forward P/E Ratio: 75.5x

Started as a hot dog cart in New York City's Madison Square Park, Shake Shack (NYSE:SHAK) is a fast-food restaurant known for its burgers and milkshakes.

Why Does SHAK Worry Us?

1. Subpar operating margin of 1.8% constrains its ability to invest in process improvements or effectively respond to new competitive threats
2. Earnings growth over the last six years fell short of the peer group average as its EPS only increased by 8.9% annually
3. ROIC of -0.5% reflects management’s challenges in identifying attractive investment opportunities

At $100.50 per share, Shake Shack trades at 75.5x forward P/E. To fully understand why you should be careful with SHAK, check out our full research report (it’s free).

Two High-Flying Stocks to Buy:

Nova (NVMI)

Forward P/E Ratio: 45.8x

Headquartered in Israel, Nova (NASDAQ:NVMI) is a provider of quality control systems used in semiconductor manufacturing.

Why Is NVMI a Good Business?

1. Market share has increased this cycle as its 26.3% annual revenue growth over the last two years was exceptional
2. Earnings growth has trumped its peers over the last five years as its EPS has compounded at 33.1% annually
3. NVMI is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

Nova’s stock price of $435.13 implies a valuation ratio of 45.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Badger Meter (BMI)

Forward P/E Ratio: 32.5x

The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE:BMI) provides water control and measure equipment to various industries.

Why Are We Backing BMI?

1. Annual revenue growth of 16.1% over the last two years was superb and indicates its market share increased during this cycle
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 27.3% over the last two years outstripped its revenue performance
3. Robust free cash flow margin of 15.5% gives it many options for capital deployment, and its growing cash flow gives it even more resources to deploy

Badger Meter is trading at $170.63 per share, or 32.5x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

High-Quality Stocks for All Market Conditions

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.