High Flier

DEFINITION of 'High Flier'

A stock that has seen its share price - and subsequently its valuation - rise to high multiples on metrics such as current earnings and current sales. Usually, the rise will happen quickly, with the stock well outpacing the gains in the overall market during the same time period. Also, higher levels of volatility are usually found in high-flying stocks to go along with frequent spikes in trade volume.

BREAKING DOWN 'High Flier'

Many internet stocks were high fliers in the late 1990s, even though most had never turned a net profit. Investors were sold on the story of what kind of money the companies could earn in the future based on the ultra-rapid growth rates seen at the time.

Many high-flying stocks tumble quickly; expectations can get well ahead of actual revenues and profits and as soon as a chink in the armour appears, short-term investors leave the stock in droves, sending shares plummeting.

RELATED TERMS
  1. Take A Flier

    The slang term for a decision to invest in highly speculative ...
  2. Multiple

    A term that measures some aspect of a company's financial well-being, ...
  3. Multiple Compression

    The effect that arises when a stock trades at a certain multiple ...
  4. Story Stock

    A stock that is trading markedly higher on optimistic expectations ...
  5. Equity Market

    The market in which shares are issued and traded, either through ...
  6. Spike

    1) The comparatively large upward or downward movement of a price ...
Related Articles
  1. Markets

    Assessing Asset Bubbles: Microsoft in 2001 vs. Today (MSFT)

    Understand the inner working of high-multiple stocks such as Microsoft, especially how earnings may play a role in the change of a stock's multiple.
  2. Investing

    Advising FAs: How To Explaining Stocks to a Client

    Without a doubt, common stocks are one of the greatest tools ever invented for building wealth.
  3. Trading

    Forces That Move Stock Prices

    You can't predict exactly how stocks will behave, but knowing what affects prices will put you ahead of the pack.
  4. Investing

    Five Investing Pitfalls To Avoid, According to Investor's Business Daily

    Common sense or common folly? Discover some approaches to circumventing typical stumbling blocks on the road to profitable investing.
  5. Investing

    Benefits and Risk of Growth Stock

    A growth stock is a share in a company whose earnings and sales are growing faster than those of most other companies.
  6. Managing Wealth

    5 Tips On When To Buy Your Stock

    Here are some ideas to help you identify stocks that have a good chance at making you money.
  7. Investing

    What is the Stock Market?

    A stock market is where shares in corporations are issued and traded. Stock markets are key components of a free market economy.
  8. Markets

    The Biggest Risks of Investing in Under Armour Stock (UA)

    Read more about the risks for investors buying into Under Armour stock in 2015. The company is priced high to its earnings, which presents a special risk.
  9. Investing

    Stocks and the Corporate Earnings Problem

    With headwinds as strong as they are and with equity upside limited, what is the prudent decision today for investors? One of our experts weighs in.
  10. Investing

    Relative Valuation Of Stocks Can Be A Trap

    This method of valuing a company can make it look like a bargain when it is not.
RELATED FAQS
  1. When does a growth stock turn into a value opportunity?

    Learn how fundamental analysts use valuation measures, such as the price-to-earnings ratio, to identify when a growth stock ... Read Answer >>
  2. Is maximizing stock price the same thing as maximizing profit?

    Simply put: yes. A company's stock price will factor in many different variables including the type of industry the firm ... Read Answer >>
  3. Do stocks that trade with a large daily volume generally have less volatility?

    Stock volatility refers to a drastic decrease or increase in value experienced by a given stock within a given period. There ... Read Answer >>
  4. What is the difference between the equity market and the stock market?

    Discover the basic information about the equity, or stock, market and the two primary classifications of equities that are ... Read Answer >>
  5. Under what circumstances is short selling advisable?

    Find out when short selling a stock is profitable and what an investor should keep in mind before deciding to pursue a short ... Read Answer >>
  6. How do restricted stocks, treasury stocks and stock appreciation rights benefit employees?

    Restricted stock represents any equity that is conditionally given or sold to an insider as compensation or as part of an ... Read Answer >>
Hot Definitions
  1. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  2. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  3. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  4. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  5. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
  6. Real Rate Of Return

    The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other ...
Trading Center