This year, stock markets have experienced growth, although not uniformly. Some stocks are recovering, while others are still declining or stagnating. However, unexpectedly many overvalued blue-chip stocks that have consistently outperformed the market in the past decade are now underperforming.
These are well-known companies that people encounter in their everyday lives. Because of various internal and external factors, many of these once-popular stocks have lost their appeal to professional traders and retail investors.
The future outlook for several of these stocks appears grim, and investors holding these stocks should sell them immediately.
If you want to invest money in the stock market, it is best to avoid these overvalued blue-chip stocks for now.
| MRNA | Moderna | $160.36 |
| NKE | Nike | $121.32 |
| JPM | JPMorgan Chase | $127.66 |
Moderna (MRNA)
Moderna (NASDAQ:MRNA) was widely lauded during the Covid-19 pandemic for producing one of the first vaccines approved by the FDA.
The markets rewarded its innovation with a rally pushing the stock to $450 in September 2021. As the pandemic fades into the background, the momentum is also decreasing. On Friday, shares closed at around $158 a pop, marking a significant decline from its pandemic high.
Moderna’s key problem is its pipeline. Its patented mRNA technology has been successfully commercialized through its COVID-19 vaccine, which is the company’s first product of its kind.
Unlike competitors such as Johnson & Johnson that have a product portfolio to rely on, Moderna often feels like a one-trick pony.
Moderna was highly successful during a global emergency caused by a pandemic that the world hadn’t seen in a century. We shouldn’t assess the company’s future potential based on its performance during this exceptional time.
Moderna predicts it will generate $18.4 billion in revenue from COVID-19 vaccine sales for the fiscal year 2022.
By 2023, the figure is expected to decrease to roughly $5 billion. Moderna has the potential to earn more revenue if it makes additional agreements. The company won’t come close to the total vaccine sales it achieved in 2022.
Apart from its COVID-19 vaccine, Moderna doesn’t have any other approved medications, and it’s projected that vaccine sales will slow down this year. Despite having several new drugs in the pipeline, until they are released to the market, the value of MRNA stock is expected to stay low.
Nike (NKE)
Nike (NYSE:NKE) possesses such a strong brand name you expect it to perform in every situation.
However, the sports apparel giant finds itself in unfamiliar waters, up just 1.24% since the start of the year.
There are two main reasons for this. The first has to do with Nike’s struggles in China. The multinational announced solid quarterly results, surpassing analysts’ revenue and earnings per share estimates.
Nike’s earnings per share of 79 cents beat the average estimate of 55 cents, while its revenue of $12.39 billion exceeded the average outlook of $11.47 billion.
However, the company’s sales in China, its third-largest market by revenue, dropped by 8% year-over-year, casting a cloud over an otherwise impressive print.
There are signs that Nike is maturing as a business, and younger, leaner competitors are capturing market share.
For example, Lululemon Athletica has outperformed its competitor Nike since its IPO in 2007, growing sales by nearly 20% annually over the past decade compared to Nike’s 8.7%.
The company has successfully implemented a direct-to-consumer model that has helped increase brick-and-mortar sales by 15% YoY and e-commerce sales by 37%.
Lululemon’s grip on distribution has helped maintain a strong hold on its branding, and expansion into international markets has diversified revenue streams.
Overall, in my eyes, Nike is not on firm footing right now. The combination of competition and woes in China weighs heavily on the stock right now. That is why it is among the more overvalued blue-chip stocks right now.
JPMorgan Chase (JPM)
JPMorgan Chase (NYSE:JPM) is one of the premier banking stocks. However, it is not immune to the current banking crisis that took down two mid-sized US regional banks and the European giant Credit Suisse.
JPMorgan Chase is performing well on the bottom line. It has beaten earnings in the last two quarters. Despite this, its stock is down almost 5% in the last month.
JPMorgan’s contribution to the banking crisis was limited to arranging a $30 billion bailout for the distressed regional bank First Republic. It seems unfair that the stock is getting punished, but that’s where we are.
CEO of JPMorgan Chase, Jamie Dimon, speaks up about regulation and fintech matters. However, he has been silent since the collapse of SVB Financial and Signature Bank in March.
In his recent annual letter to shareholders, Dimon focused on the present state of JPMorgan Chase and the industry. He talked more about the potential response to the crisis rather than dissecting it. He cautioned that the crisis is ongoing and will continue to have consequences for years.
These words do not instill a lot of confidence. As a result, for now, JPM remains a risky investment. However, when it reports earnings this week, it can strike its name off this list of overvalued blue-chip stocks. A sizeable earnings beat can solve many problems.
On the publication date, Faizan Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.