The term “high flyer” is often used to refer to individuals who were able to accumulate many notable achievements at a much faster rate than commonly expected. However, in the context of finance, a stock which is described as a high flyer is one which has been exceptional in terms of performance within a short period of time.
Since high flyers rise so quickly, the tendency is also for them to make a steep drop, depending on certain conditions. This volatility is something which investors must consider carefully. Since such stocks are known oftentimes very speculative, many investors shy away from them. More daring ones, on the other hand, like investing in such stocks because of the potential for high capital gains. Capital gains are acquired when an asset is sold for more than it was bought. In the case of high flyers, much profit may be made, but it is also highly likely for these to be short-term capital gains, especially if the performance of the stocks turns out to be unsustainable. In such a case, regular tax rates will more likely be applied, since taxes are usually only lowered for long-term capital gains.
Since high flyers have such a high profile in the world of investors, they are considered the opposite of sleepers. A sleeper is a type of stock which is not really attractive to investors. However, it may have the potential to perform surprisingly well as investors become more familiar with it and better understand its potential.