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.

Separating true intrinsic value from speculation isn’t easy, especially during bull markets. That’s where StockStory comes in - to help you find high-quality companies that will stand the test of time. Keeping that in mind, here is one high-flying stock with strong fundamentals and two where the price is not right.

Two High-Flying Stocks to Sell:

Under Armour (UAA)

Forward P/E Ratio: 34.2x

Founded in 1996 by a former University of Maryland football player, Under Armour (NYSE: UAA) is an apparel brand specializing in sportswear designed to improve athletic performance.

Why Should You Sell UAA?

1. Constant currency revenue growth has disappointed over the past two years and shows demand was soft
2. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
3. High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Under Armour is trading at $6.15 per share, or 34.2x forward P/E. Check out our free in-depth research report to learn more about why UAA doesn’t pass our bar.

Caterpillar (CAT)

Forward P/E Ratio: 30.7x

With its iconic yellow machinery working on construction sites, Caterpillar (NYSE: CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.

Why Are We Hesitant About CAT?

1. Sales stagnated over the last two years and signal the need for new growth strategies
2. Gross margin of 29.2% is below its competitors, leaving less money to invest in areas like marketing and R&D
3. Earnings per share have dipped by 5.2% annually over the past two years, which is concerning because stock prices follow EPS over the long term

At $694.93 per share, Caterpillar trades at 30.7x forward P/E. Read our free research report to see why you should think twice about including CAT in your portfolio.

One High-Flying Stock to Buy:

TransDigm (TDG)

Forward P/E Ratio: 30.3x

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?

1. Average organic revenue growth of 10.1% over the past two years demonstrates its ability to expand independently without relying on acquisitions
2. Incremental sales over the last five years have been highly profitable as its earnings per share increased by 26.8% annually, topping its revenue gains
3. Robust free cash flow margin of 20.4% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business

TransDigm’s stock price of $1,197 implies a valuation ratio of 30.3x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.

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 Kadant (+351% five-year return). Find your next big winner with StockStory today.