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The prolonged period of loose monetary policy, in part, has led to stretched valuations for several fundamentally weak stocks. The stock market got a further boost from solid second-quarter earnings reports. However, along with the possible negative impact on the economic recovery of rising COVID-19 cases, concerns over high inflation have been fostering market volatility. The International Monetary Fund (IMF) warned that inflation could be persistent. As a result, several investors predict a market correction in the near term.
Against this backdrop, we think fundamentally weak stocks Royal Caribbean Group (RCL) and Bill.com Holdings, Inc. (NYSE:BILL) look significantly overvalued at their current price levels and are due for a pullback. So, it’s best to avoid these two stocks now.
