3 High-Flying Stocks We Steer Clear Of

"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.

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. That said, here are three high-flying stocks where the price is not right and some other investments you should look into instead.

Semtech (SMTC)

Forward P/E Ratio: 41x

A public company since the late 1960s, Semtech (NASDAQ:SMTC) is a provider of analog and mixed-signal semiconductors used for Internet of Things systems and cloud connectivity.

Why Is SMTC Risky?

1. Historical operating margin losses have deepened over the last five years as it prioritized growth over profits
2. Investment activity picked up over the last five years, pressuring its weak free cash flow margin of 9.3%
3. Negative returns on capital show that some of its growth strategies have backfired, and its decreasing returns suggest its historical profit centers are aging

Semtech is trading at $80.20 per share, or 41x forward P/E. If you’re considering SMTC for your portfolio, see our FREE research report to learn more.

Teradyne (TER)

Forward P/E Ratio: 44.9x

Sporting most major chip manufacturers as its customers, Teradyne (NASDAQ:TER) is a US-based supplier of automated test equipment for semiconductors as well as other technologies and devices.

Why Are We Wary of TER?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 1.1% annually over the last five years
2. Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
3. Free cash flow margin shrank by 8.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

At $239.43 per share, Teradyne trades at 44.9x forward P/E. Check out our free in-depth research report to learn more about why TER doesn’t pass our bar.

Mercury Systems (MRCY)

Forward P/E Ratio: 100x

Founded in 1981, Mercury Systems (NASDAQ:MRCY) specializes in providing processing subsystems and components for primarily defense applications.

Why Should You Dump MRCY?

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. Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 7.6 percentage points
3. Issuance of new shares over the last five years caused its earnings per share to fall by 18.3% annually while its revenue grew

Mercury Systems’s stock price of $101.07 implies a valuation ratio of 100x forward P/E. Read our free research report to see why you should think twice about including MRCY in your portfolio.

Stocks We Like More

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 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.