1 high-flying stock for long-term investors and 2 we turn down

"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. 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:

Shake Shack (SHAK)

Forward P/E ratio: 52.8x

Started as a hot dog cart in New York City's Madison Square Park, Shake Shack (NYSE:SHAK) is a fast-food restaurant known for its burgers and milkshakes.

Why Does SHAK Give Us Pause?

1. Operating margin of 2.5% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments

2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.2% for the last two years

3. ROIC of 0.1% reflects management's challenges in identifying attractive investment opportunities

At $70.44 per share, Shake Shack trades at 52.8x forward P/E. If you're considering SHAK for your portfolio, see our FREE research report to learn more .

Surgery Partners (SGRY)

Forward P/E ratio: 97x

With more than 180 locations across 33 states serving as alternatives to traditional hospital settings, Surgery Partners (NASDAQ:SGRY) operates a national network of outpatient surgical facilities including ambulatory surgery centers and short-stay surgical hospitals.

Why Does SGRY Worry Us?

1. Disappointing unit sales over the past two years imply it may need to invest in improvements to get back on track

2. Forecasted revenue decline of 14.3% for the upcoming 12 months implies demand will fall off a cliff

3. 7× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Surgery Partners is trading at $23.22 per share, or 97x forward P/E. Read our free research report to see why you should think twice about including SGRY in your portfolio, it's free .

One high-flying stock to buy:

Rocket Lab (RKLB)

Forward P/E ratio: 3,430.9x

Becoming the first private company in the Southern Hemisphere to reach space, Rocket Lab (NASDAQ:RKLB) offers rockets designed for launching small satellites.

Why Do We Love RKLB?