"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. 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:
WD-40 (WDFC)
Forward P/E Ratio: 33.9x
Short for “Water Displacement perfected on the 40th try”, WD-40 (NASDAQ: WDFC) is a renowned American consumer goods company known for its iconic and versatile spray, WD-40 Multi-Use Product.
Why Does WDFC Fall Short?
- Lackluster 6.1% annual revenue growth over the last three years indicates the company is losing ground to competitors
- Subscale operations are evident in its revenue base of $620 million, meaning it has fewer distribution channels than its larger rivals
- Estimated sales growth of 4.1% for the next 12 months implies demand will slow from its three-year trend
WD-40’s stock price of $207.19 implies a valuation ratio of 33.9x forward P/E. If you’re considering WDFC for your portfolio, see our FREE research report to learn more.
Novanta (NOVT)
Forward P/E Ratio: 34.9x
Originally a pioneer in the laser scanning industry during the late 1960s, Novanta (NASDAQ: NOVT) offers medicine and manufacturing technology to the medical, life sciences, and manufacturing industries.
Why Is NOVT Not Exciting?
- Annual revenue growth of 4% over the last two years was below our standards for the industrials sector
- Flat earnings per share over the last two years lagged its peers
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.7 percentage points
Novanta is trading at $119.84 per share, or 34.9x forward P/E. To fully understand why you should be careful with NOVT, check out our full research report (it’s free for active Edge members).
One High-Flying Stock to Buy:
TransDigm (TDG)
Forward P/E Ratio: 33x
Supplying parts for nearly all aircraft currently in service, TransDigm (NYSE: TDG) develops and manufactures components and systems for military and commercial aviation.
Why Are We Bullish on TDG?
- Core business can prosper without any help from acquisitions as its organic revenue growth averaged 12% over the past two years
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 20.2% annually, topping its revenue gains
- Robust free cash flow margin of 19.6% gives it many options for capital deployment, and its recently improved profitability means it has even more resources to invest or distribute
At $1,266 per share, TransDigm trades at 33x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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-micro-cap company Tecnoglass (+1,754% 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.
