Expensive stocks typically earn their valuations through superior growth rates that other companies simply can’t match. The flip side though is that these lofty expectations make them particularly susceptible to drawdowns when market sentiment shifts.
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 with big downside risk and some other investments you should consider instead.
IPG Photonics (IPGP)
Forward P/E Ratio: 71.3x
Both a designer and manufacturer of its products, IPG Photonics (NASDAQ: IPGP) is a provider of high-performance fiber lasers used for cutting, welding, and processing raw materials.
Why Do We Think IPGP Will Underperform?
- Sales tumbled by 4.3% annually over the last five years, showing market trends are working against its favor during this cycle
- Operating profits fell over the last five years as its sales dropped and it struggled to adjust its fixed costs
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
At $87.19 per share, IPG Photonics trades at 71.3x forward P/E. To fully understand why you should be careful with IPGP, check out our full research report (it’s free for active Edge members).
Kulicke and Soffa (KLIC)
Forward P/E Ratio: 36.8x
Headquartered in Singapore, Kulicke & Soffa (NASDAQ: KLIC) is a provider of production equipment and tools used to assemble semiconductor devices
Why Should You Dump KLIC?
- Annual sales declines of 10.8% for the past two years show its products and services struggled to connect with the market during this cycle
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 23.4 percentage points
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
Kulicke and Soffa’s stock price of $40.93 implies a valuation ratio of 36.8x forward P/E. Check out our free in-depth research report to learn more about why KLIC doesn’t pass our bar.
Saia (SAIA)
Forward P/E Ratio: 29.1x
Pivoting its business model after realizing there was more success in delivering produce than selling it, Saia (NASDAQ: SAIA) is a provider of freight transportation solutions.
Why Are We Cautious About SAIA?
- Earnings per share fell by 7.3% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 9.6 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
Saia is trading at $298 per share, or 29.1x forward P/E. If you’re considering SAIA for your portfolio, see our FREE research report to learn more.
Stocks We Like More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
