Sell These Overvalued Nasdaq 100 Stocks at Their Top

Introduction

The Nasdaq 100 index is enjoying a robust rally in 2023, recently soaring to an unprecedented high of $22,175, boasting year-to-date gains of about 4.3%. While this bullish trend is commendable, we need to exercise caution—especially when it comes to some of the index’s standout performers. Investors might be tempted to hold on for further appreciation, but the smart move would be to secure profits now rather than risk a potential reversal later this year. Below, we’ll analyze some top stocks that are currently overvalued, making them prime candidates for a timely exit.

Top Nasdaq 100 Stocks to Sell

Here are the Nasdaq 100 stocks that should be on your sell list: **Palantir Technologies (PLTR)**, **AppLovin (APP)**, **Constellation Brands (CEC)**, and **Meta Platforms (META)**.

AppLovin (APP)

AppLovin has outperformed all others in the Nasdaq 100 this year, skyrocketing by 52% to rattle off an astonishing year-over-year gain of 725%. This growth, driven by strong earnings, has led Wall Street gurus to consider its inclusion in the “Magnificent 7” cohort of tech giants. However, caution is advised due to three critical factors:

1. **Extremely Overvalued**: The forward Price-to-Earnings (PE) ratio sits at an eye-watering 77, clearly indicating that the stock is trading in speculative territory.
2. **Potential Mean Reversion**: As with all rapid growth stocks, AppLovin can be subject to a mean reversion—meaning we could see a significant pullback as it corrects to more historical norms.
3. **Current Phase of Wyckoff Method**: The stock appears to be in a markup phase and could soon transition into a distribution and markdown phase, posing further risks to long-term holders.

For a deeper analysis, read more about the [AppLovin stock forecast](https://example.com).

Palantir Technologies (PLTR)

Palantir has also enjoyed a stellar year, with an uptick of 48% and a staggering 360% increase over the past 12 months. Despite this enthusiastic growth, especially after reporting a surge in commercial revenue and strong demand for its artificial intelligence solutions, one must consider how much longer the ride can last.

Palantir is trading at a forward PE ratio of 402—a number that is hard to justify even for a tech behemoth. With an annual revenue of $2.8 billion and a net income of $468 million, Palantir’s current market valuation of over $262 billion seems stretched and precarious. This is a classic setup for a correction, making it prudent for investors to cash out.

Meta Platforms (META)

Once again, Meta Platforms is in the spotlight—and not just for the right reasons. The stock has rebounded from a grim low of $86 in 2022 to an impressive $740 this year, bringing its market capitalization to over $1.7 trillion. Revenue has grown commendably, moving from $86 billion in 2020 to over $164 billion last year.

Despite these numbers, caution is warranted. While Meta has made strides in efficiency and profitability—achieving an annual profit of $62 billion—the stock’s high valuation may not be sustainable. As investors look to lock in gains, the potential for a pullback is very real, especially given the lack of a clear growth catalyst moving forward.

Constellation Energy (CEC)

The energetic rise of Constellation Energy saw the stock price leap by 43% this year and a startling 148% over the past 12 months. Much of this growth can be attributed to the company’s recent partnership with Microsoft to revive an old nuclear power plant—a strategy aimed at capitalizing on rising artificial intelligence demand. However, investors would do well to remember that while this deal might promise future growth, actual profits and revenue may take time to materialize, underscoring this stock’s overvaluation.

Conclusion

While it’s tempting to hold onto winning stocks in a booming market, it’s vital to adopt a disciplined approach, especially concerning the overvalued giants in the Nasdaq 100. Locking in profits on these stocks now will safeguard gains and set the stage for reinvestment opportunities, while the risk of a downturn looms on the horizon. Remain vigilant, invest wisely, and remember: timely selling can sometimes be the best strategy in a volatile market.