What is typically a characteristic of high P/E ratios?

A high price-to-earnings (P/E) ratio is typically interpreted as a signal that investors expect substantial growth in a company’s future earnings. When a company's P/E ratio is elevated, it often means that investors are willing to pay a premium for its current earnings because they anticipate that those earnings will rise significantly over time. This expectation of growth can be influenced by various factors, such as innovative products, market expansion, or favorable industry trends.

In contrast, a low P/E ratio might suggest that a stock is undervalued, but it can also indicate concerns regarding a company's future performance. Therefore, high P/E ratios are generally associated with growth-oriented stocks rather than stable, low-risk investments, which would more likely exhibit lower P/E ratios. Thus, the characteristic that aligns with high P/E ratios is the suggestion that there are high earnings growth expectations.