Overvalued stocks are usually stocks in which investors have high expectations. These stocks usually trade at high PE and PB ratios and offer low dividend yields. They are often very popular stocks in the market. They don't offer much margin of safety as most investors are interested in buying them.
Fair Value Estimate for Apple
With its 2-star rating, we believe Apple's stock is overvalued compared with our long-term fair value estimate of $200 per share, which implies a fiscal 2025 adjusted price/earnings multiple of 27 times, an enterprise value/sales multiple of 7 times, and a free cash flow yield of 4%.
Tesla Vehicle Delivery Trends Are Concerning, and Shares May Be Overvalued. Despite shares soaring more than 60% last year, Tesla's annual vehicle deliveries actually declined. The company's automotive business is facing several significant headwinds.
Price-earnings ratio (P/E)
A high P/E ratio could mean the stocks are overvalued. Therefore, it could be useful to compare competitor companies' P/E ratios to find out if the stocks you're looking to trade are overvalued. P/E ratio is calculated by dividing the market value per share by the earnings per share (EPS).
An overvalued asset is an investment that trades for more than its intrinsic value. For example, if a company with an intrinsic value of $7 per share trades at a market value $13 per share, it is considered overvalued.
The intrinsic value of one AMZN stock under the Base Case scenario is 133.94 USD. Compared to the current market price of 218.46 USD, Amazon.com Inc is Overvalued by 39%.
Intrinsic Value. The intrinsic value of one GOOGL stock under the Base Case scenario is 147.74 USD. Compared to the current market price of 192.04 USD, Alphabet Inc is Overvalued by 23%.
The stock value may increase to $271.00-431.00 by the end of 2025. However, some analysts expect the rate to decline to $230.49-207.83 in 2025. In 2026, the asset quotes will continue to grow. According to major analytical agencies, the value of TSLA may reach $305.36-471.00.
The intrinsic value of one MSFT stock under the Base Case scenario is 317.76 USD. Compared to the current market price of 418.95 USD, Microsoft Corp is Overvalued by 24%.
Analysts See 13% Upside For Amazon Stock
The 30-year-old Amazon is among the world's most valuable companies. It is a leader in e-commerce spending and in cloud computing through its Amazon Web Services business. It is also quickly growing its advertising business into a challenger to Google (GOOGL) and Meta (META).
NASDAQ: AAPL
Because the more time you hold on, the more the investment compounds, it's an exponential difference. If you had invested $1,000 in Apple stock 20 years ago, today you'd have more than $227,000, at an annualized return of 31.2%.
Overvalued stocks are those whose market price exceeds their intrinsic value. Investors often overhype these stocks, leading to high price-to-earnings (PE) and price-to-book (PB) ratios and low dividend yields. Such stocks are typically popular but offer limited margin of safety.
To give you some sense of what the average for the market is, though, many value investors would refer to 20 to 25 as the average P/E ratio range. And again, like golf, the lower the P/E ratio a company has, the better an investment the metric is saying it is.
Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. Those of you that have flipped on CNBC either on purpose or by accident sometime in the past two years may know those companies as the so-called Magnificent Seven, or “Mag 7” in Wall Street-speak.
The company expects growth to reaccelerate in the back half of fiscal 2025 as more AI capacity comes online. Overall MSFT ranks 5th on our list of the best cloud computing stocks to buy according to analysts.
The analysts claiming NVDA stock is overvalued cite fundamental metrics like its forward price-to-earnings (P/E) ratio, around 40x, and its price-to-sales (P/S), over 42x. Both are above the semiconductor sector average but need to be taken into context.
The Relative Value of one WMT stock under the Base Case scenario is 66.02 USD. Compared to the current market price of 93 USD, Walmart Inc is Overvalued by 29%.
“COST/AMZN/WMT—aka 'The Big Three' will likely gobble ~60%+ of U.S. retail growth this year, so we see Costco's elite share gain as likely to sustain outperformance.” Most of the Street sides with Melich, with 58% of analysts rating Costco stock a Buy, 37% a Hold, and 5% Sell, according to FactSet.
NVDA sits at a Zacks Rank #2 (Buy), holds a Momentum Style Score of A, and has a VGM Score of B. The stock is down 5.9% and up 1.2% over the past one-week and four-week period, respectively, and Nvidia has gained 148.4% in the last one-year period as well.
P/E ratio = P/E ratio / Growth rate of the company's EPS. Dividend-adjusted PEG Ratio / (Growth rate of EPS + Dividend paid). Financial experts consider a PEG ratio below 2 to be the threshold; above this, such stock is considered overvalued. Hence, the lower the PEG's value, the more undervalued it is and vice versa.