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However, this backdrop has led to expensive valuations for some fundamentally weak stocks. In addition, the current 38.54 Shiller PE ratio (or CAPE ratio) is significantly higher than the 16.84 mean. Several stocks that have rallied based solely on social media hype over the past few months have partly contributed to the higher-than-average Shiller P/E ratio.
Against this backdrop, we think it is wise to avoid the following three very popular stocks: Snowflake Inc. (SNOW), NIO Inc. (NIO), and Twilio Inc. (TWLO). They are rated Sell or Strong Sell in our proprietary POWR Ratings system. In addition, they have a D or F grade for Value and Quality, among other components.
