Some stocks don't catch my eye unless they're really affordable.
Starting a new position at a low price helps me in several ways:
- I'm more likely to take a calculated chance on a risky idea.
- The stock will be poised for greater long-term returns if the investment thesis plays out in my favor.
- This is also a classic way to follow in the footsteps of investing legends like Warren Buffett. "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price," Buffett said.
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But there are a handful of stocks that would be fantastic buys even at a soaring valuation. These are the growth stories I understand and trust so well that I don't mind a premium price tag. You never know where any stock will go in the short term, and maybe you'll see a dip or correction along the way -- but these stocks are primed for long-term success and might never be this affordable again. Everything is relative on Wall Street.
That's why I'd gladly buy Netflix (NFLX 0.92%), IBM (IBM 1.39%), and Brinker International (EAT 0.57%) shares right now, even though the stocks are skyrocketing. Let me explain so you can determine whether these elevated stocks are right for your portfolio, too.
Netflix: Up 92% in 52 weeks
Media-streaming veteran Netflix had a dry spell in recent years, but it's a different story in 2025. New ideas such as ad-based subscription plans and a crackdown on account-sharing shenanigans are making a difference, and the long-term growth opportunity is as large as ever.
Netflix shares have gained 92% over the last year as I'm writing this on July 3. The stock trades at 61 times earnings and 74 times free cash flows -- lofty territory even for a proven high-growth performer.
At the same time, Netflix keeps proving the bears wrong, time and time again. Let's say you invested $1,000 in Netflix stock at the start of 2016. It traded at 408 times earnings back then, and free cash flows were negative.
That must have been a bad idea, right? Well, that hypothetical bet on Netflix's long-term strategy would be worth $11,350 today.
I can't promise that Netflix will outperform expectations by that much again. Past performance doesn't necessarily reflect future results, you know. But I have been able to tell similar stories many times over the last two decades, and Netflix isn't done growing yet.
IBM: Up 66% in 52 weeks
Big Blue started focusing on cloud computing, consulting services, and artificial intelligence (AI) when Ginni Rometty took the helm, way back in 2012. (Arvind Krishna is now CEO.) It took years of frustration, but IBM's AI and cloud focus is finally paying off.
Leaving consumer-grade AI services to other providers, IBM offers business-class tools with robust data security and audit-ready information flows. As a result, IBM's generative AI orders soared from $1 billion a year ago to $6 billion in April's Q1 report. And the stock isn't even expensive, changing hands at a modest 21 times free cash flow. That's not too shabby after posting market-busting returns over the last year.
Brinker: Up 152% in 52 weeks
Finally, restaurant chain Brinker is executing a successful turnaround plan. The company behind Chili's and Maggiano's Little Italy struggled to rebuild its customer traffic after the COVID-19 pandemic, falling behind top performers such as Chipotle Mexican Grill and Darden Restaurants in terms of revenue growth.
That downtrend took a sharp turn for the better under new CEO Kevin Hochman, who took the reins in 2022. Under Hochman, Chili's simplified its sprawling menu and refocused its marketing efforts. Other restaurants and the industry press now see Brinker as a shining example of how to fix a broken brand.
So Brinker's stock is soaring too, but from a much lower starting point. Hence, the shares are trading at an affordable valuation of 21 times free cash flow and 25 times earnings, even after more than doubling in one year.
I don't own this stock yet, but that might change soon. It's so refreshing to see a common-sense business plan striking exactly the right chord with consumers.
