3 Popular Stocks That Are Overvalued At Current Prices

white and blue castle

Growth stocks have had a tremendous rally over the past year, capitalizing on pandemic-driven trends. However, with an ongoing rotation by investors away from growth stocks and toward their value brethren, along with prevailing inflationary concerns, we think it’s best to now avoid overvalued stocks Disney (DIS), Boeing (BA), and Snap (SNAP). Read on for an explanation.

New trends ushered in by the COVID-19-pandemic helped push growth stocks new highs last year. However, investors are now turning their attention to a different class of stocks as the economy enters a  recovery phase. A rotation by investors toward value stocks from growth stocks is evident from the Vanguard Value ETF’s (VTV) 10.4% gain  year-to-date, versus the Vanguard Growth ETF’s (VUG) marginal decline over this period.

Growth companies  have been trying to recover their lost momentum by improving their product pipelines and increasing their operational efficiency. But their declining growth potential–with people gradually returning to an “analog” way of life–is making them look significantly overvalued.

The Walt Disney Company (DIS - Get Rating), The Boeing Company (BA - Get Rating), and Snap Inc. (SNAP - Get Rating) are currently trading at lofty valuations absent high growth potential. So, we think they are best avoided now.

The Walt Disney Company (DIS - Get Rating)

As one of the top entertainment companies worldwide, DIS operates through four business segments — Media Networks, Parks Experiences and Products, Studio Entertainment, and Direct-to-Consumer and International. Its Disney + streaming service generated  huge demand amid the coronavirus pandemic because  people spent more time at home.  Its theme park segment is  expected to benefit in the near term because  two of its theme parks in California are expected to be re-opened on April 30.

On March 18,  ESPN, a unit of DIS,  reached a long-term agreement with the National Football League (NFL) through 2023 that is expected to result in ABC/ESPN joining the Super Bowl coverage rotation, additional playoff action coverage and exclusive national ESPN+ matchups among others. In February, DIS  unveiled a trailer for its feature film, Luca. However, the company has been facing allegations of pay discrimination and pay secrecy.

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Mark Walla 4 weeks ago Member's comment

See I thought #Disney was a recovery stock and everything new and great they did with their streaming service was sugar on the icing! $DIS