Coca-Cola is a strong business but trading at a forward PE of 25x, offering limited upside and no clear margin of safety.
Source Post
I Wouldn’t Touch These 7 Stocks At Today’s Prices
May 19, 2026
The creator discusses how high market valuations and AI stock surges can create a smaller margin for error for individual stocks, even if the overall market continues to rise. The focus is on selective stock picking rather than a market crash prediction, emphasizing that while long-term returns are often positive, buying at any price is not advisable. The AI cycle is compared to the internet boom, with a caution against overly aggressive discounting of future earnings.
Linked Mentions
Tickers discussed in this post
Union Pacific is a solid business but lacks compelling upside with only 6% implied by Wall Street targets and weak growth metrics.
Johnson & Johnson is not considered widely overvalued but is trading 12% above fair value ($204) with a forward PE above its historical norm and a lower yield, suggesting a wait for a better entry.
AMD's impressive growth is acknowledged, but its stock is trading at a significant premium (57x forward earnings) and is 7% above intrinsic value, suggesting a wait for a better entry point.
Caterpillar, a cyclical industrial, is trading at an aggressive 35-36x forward earnings, significantly above its historical average, indicating overvaluation.
Costco's valuation is extreme at a 52x forward PE, trading 48% above fair value, suggesting investors are paying for perfection.
Walmart is a great business but severely overvalued at its current price, trading at 43% above the creator's fair value estimate.
Meta is included in the discussion of Big Tech's massive AI infrastructure spending and the need for future returns.
Alphabet is highlighted for its large investment in AI infrastructure and the market's expectation for profitable returns.
Amazon is noted for its substantial AI infrastructure spending, with market expectations for future returns.