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4 overvalued stocks to sell in this bear market


We are officially in a bear market. The good news is that the market has two ends, which means that we can profit from stock price appreciation as well as depreciation. For this reason, I have compiled a list of overvalued stocks to sell in this bear market.

I thought long and hard about how I was going to structure this article. I will introduce you all to stocks that are trading above their intrinsic value. Additionally, I delved into the cyclical phase of the economy to determine which sectors would likely collapse in a prolonged downward spiral. Finally, I considered an investment horizon; the yield curve indicates that we could experience two more years of market turbulence. So consider this article as a 48-month ex-ante analysis.

Here are the four overvalued stocks to sell:

Teleprinter Company Price
NVDA Nvidia Corporation $158.80
NFLX Netflix Inc. $175.51
CLC Chevron Company $148.38
CVNA Carvana Co. $24.27

Stock for sale: Nvidia (NVDA)

Source: Shutterstock

Nvidia (NASDAQ:NVDA) the stock is in freefall after capitulating almost 50% since the start of the year. Looking ahead, Nvidia faces a few challenges. First, the company is facing re-openings and runaway inflation, which could hurt its PC game sales. In addition, supply chain problems continue to be troublesome for semiconductor companies, as the delivery deadline is always close. 26 weeks.

Finally, NVDA stock is overvalued as it is trading at 13.45x its sales and 44.35x its cash. Personally, I would sell the stock short because it has a long way to go before it reaches its intrinsic value.

Netflix (NFLX)

4 overvalued stocks to sell in this bear market

Source: Kaspars Grinvalds / Shutterstock.com

netflix (NASDAQ:NFLX) the stock’s fall of more than 70% since the beginning of the year does not in any way make it an opportunity to “buy the drop”. Its recent downturn in subscribers coupled with the password-sharing saga means there is significant idiosyncratic risk associated with this stock. Additionally, consumers will likely reduce the costs of ancillary goods, such as subscriptions, as the economy continues to falter with tight monetary policy.

Let’s look at things from a quantitative point of view. NFLX stock is overvalued as its stock is trading at 144x its cash. Additionally, NFLX stock is facing a downward spiral as it trades below its 10, 50, 100 and 200 days moving averages.

Stocks for sale: Chevron (CVX)

4 overvalued stocks to sell in this bear market

Source: LesPalenik / Shutterstock.com

This may seem like a weird culprit to many, but give me a chance to explain. First, energy prices are likely to have peaked with rising interest rates, which should dampen consumer purchasing power. In addition, supply chains are gradually freeing up as indices of the Chinese Purchasing Managers’ Index regain strength. The last systemic factor I would mention is that non-core inflation – energy and food – is more elastic than core inflation, which means we could see a sharp drop in oil prices. energy as soon as the purchasing power of consumers begins to decline.

Do not mistake yourself, Herringbone (NYSE:CLC) operations have been robust over the past year, as evidenced by its year-over-year revenue growth of 84.52%. However, at a price-to-book ratio of 1.99xit must be concluded that the CVX share is overvalued.

Carvana (CVNA)

4 overvalued stocks to sell in this bear market

Source: Jonathan Weiss/Shutterstock.com

I class personally carvana (NYSE:CVNA) stock as a stock market bubble asset meme. CVNA stock has fallen more than 90% in the past year as investors discovered flaws in the company’s business model. Carvana is in freefall because its high beta of 2.59x exhibits excessive sensitivity to the 2022 bear market. Additionally, the company operates in durable goods, which is experiencing a cyclical downturn as consumers cut back on costly discretionary spending.

Finally, Carvana is overvalued, with its stock trading at 27.32x its book value. Thus, I think CVNA stock still has a long way to go before trading at a realistic price.

As of the date of publication, Steve Booyens held an indirect long position in CVX and NVDA. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publication guidelines.

Steve co-founded Pearl Gray Equity and Research in 2020 and has since been responsible for institutional equity research and public relations. Prior to founding the company, Steve spent time in various finance roles in London and South Africa. He holds a Masters in Investment Banking from Queen Mary – University of London and is preparing his Ph.D. in finance, in which he tries to challenge the famous Fama-French 5-factor pricing model by integrating ESG factors. His articles are published on various reputable web pages such as Seeking Alpha, TipRanks, Yahoo Finance and Benzinga. Steve’s articles on InvestorPlace form an interesting juxtaposition between mainstream opinion and objective theory. Readers can expect coverage on frequently traded stocks, cryptocurrencies, crowdfunding, and ETFs.

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