"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.
Determining whether a company’s quality justifies its price causes headaches for nearly all investors, which is why we started StockStory - to help you separate the real opportunities from the speculative ones. That said, here is one high-flying stock to hold for the long term and two where the price is not right.
Two High-Flying Stocks to Sell:
Hyatt Hotels (H)
Forward P/E Ratio: 45.2x
Founded in 1957, Hyatt Hotels (NYSE: H) is a global hospitality company with a portfolio of 20 premier brands and over 950 properties across 65 countries.
Why Is H Risky?
- 3.2% annual revenue growth over the last two years was slower than its consumer discretionary peers
- Low free cash flow margin of 3.6% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Rising returns on capital show management is making relatively better investments
Hyatt Hotels’s stock price of $163.81 implies a valuation ratio of 45.2x forward P/E. Check out our free in-depth research report to learn more about why H doesn’t pass our bar.
SoundHound AI (SOUN)
Forward P/S Ratio: 14.6x
Born from the idea that machines should understand human speech as naturally as people do, SoundHound AI (NASDAQ: SOUN) develops voice recognition and conversational intelligence technology that enables businesses to integrate voice assistants into their products and services.
Why Do We Think Twice About SOUN?
- Sky-high servicing costs result in an inferior gross margin of 42.4% that must be offset through increased usage
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
At $9.52 per share, SoundHound AI trades at 14.6x forward price-to-sales. Read our free research report to see why you should think twice about including SOUN in your portfolio.
One High-Flying Stock to Buy:
GE Aerospace (GE)
Forward P/E Ratio: 37.4x
One of the original 12 companies on the Dow Jones Industrial Average, General Electric (NYSE: GE) is a multinational conglomerate providing technologies for various sectors including aviation, power, renewable energy, and healthcare.
Why Is GE a Good Business?
- Market share has increased this cycle as its 16.7% annual revenue growth over the last two years was exceptional
- Share buybacks catapulted its annual earnings per share growth to 41.9%, which outperformed its revenue gains over the last two years
- GE is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its improved cash conversion implies it’s becoming a less capital-intensive business
GE Aerospace is trading at $286.85 per share, or 37.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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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.
