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2 overvalued stocks to avoid buying now
VVisa(V) Finbold·2025-03-01 13:41

Group 1: Market Overview - The stock market is currently experiencing volatility, with major equities facing notable sell-offs, presenting potential buying opportunities but not all stocks are ideal for investment due to valuation concerns [1] Group 2: VeriSign (NASDAQ: VRSN) - VeriSign is showing signs of overvaluation, trading at 237.88withaP/Eratioof29.73,whichishighgivenitsmodestEPSgrowthof+1.12237.88 with a P/E ratio of 29.73, which is high given its modest EPS growth of +1.12% [2][3] - The company's revenue growth over the past three years has been modest at 5.7% CAGR, and billings have only increased by 4.5% year-over-year on average over the last four quarters, indicating struggles with customer acquisition and retention [3] - VeriSign reported 1.56 billion in revenue for 2024, a 4.3% increase from 2023, with operating income rising to 1.06billion[4]Thecompanyexperienceda2.11.06 billion [4] - The company experienced a 2.1% year-over-year decline in .com/.net registrations in the last quarter of 2024, which could signal headwinds for future growth [4] - Despite these fundamentals, high-profile investors like Warren Buffett have shown interest in VeriSign, with the stock up over 15% year-to-date [5] Group 3: Visa (NYSE: V) - Visa is also considered overvalued, with a P/E ratio of 37.05, despite reporting positive EPS growth of 14.45% [7] - The company faces challenges such as rising operating expenses, which increased by 11.7% in 2023 and 10.8% in 2024, and client incentives that reduced revenue by 19.4% and 11.9% year-over-year [8] - Visa is dealing with legal challenges, including a U.S. antitrust lawsuit and potential fee caps in the U.K., which could disrupt its market position [9] - Some analysts maintain an optimistic outlook for Visa, with TD Cowen raising the price target to 382 and BMO Capital Markets reaffirming an 'Outperform' rating with a 370target[10]Asofthelatesttradingsession,Visawasvaluedat370 target [10] - As of the latest trading session, Visa was valued at 362.71, reflecting a 15% year-to-date growth [11]