The stock market has recently experienced a phase of volatility, with major equities recording notable sell-offs.
Indeed, such market conditions might offer a perfect opportunity to buy the dip, but due to their valuation, not all stocks are ideal for investment at the moment.
To this end, Finbold has identified two overvalued stocks that are potentially priced beyond their fundamental value, making them risky buys at current levels.
Picks for you
VeriSign (NASDAQ: VRSN)
American network infrastructure company VeriSign (NASDAQ: VRSN) is showing signs of overvaluation as of March 1, 2025. The stock, trading at $237.88 with a P/E ratio of 29.73, appears expensive compared to its modest earnings growth.
According to data from TradingView, VeriSign’s EPS growth is +1.12%, a figure that fails to justify such a high valuation, especially in the technology services sector, where significant growth is typically expected.
At the same time, VeriSign might be a risky buy due to its sluggish growth and signs of weakening demand. Over the past three years, its revenue has grown at a modest 5.7% CAGR, falling short of industry benchmarks.
Additionally, the company’s billings, a key indicator of future revenue, increased by just 4.5% year-over-year on average over the last four quarters. This suggests that VeriSign is struggling with customer acquisition and retention, potentially due to rising competition.
Regarding the company’s revenue, VeriSign reported $1.56 billion for 2024, up 4.3% from 2023. The operating income was $1.06 billion in 2024, compared to $1.00 billion in 2023.
Notably, for the last quarter of 2024, the internet giant recorded a 2.1% year-over-year decline in .com/.net registrations, which generate the bulk of VeriSign’s revenue through fixed-fee contracts. This decline signals potential headwinds for the company’s growth trajectory.
Despite the risky fundamentals, VRSN has witnessed notable interest from high-profile investors. Berkshire Hathaway (NYSE: BRK.A) ‘s Warren Buffett is among the notable investors increasing their bets on VRSN.
Regarding the stock price movement, VRSN has had an impressive start to 2025. As of the last trading session, the stock was valued at $237.88, up over 15% year-to-date.
Visa (NYSE: V)
Due to valuation concerns, Visa (NYSE: V), a global leader in payment processing, is another stock that investors should avoid for now. The stock currently has a P/E ratio of 37.05, making Visa’s valuation notably high, even for a company with a strong market position.
While the company reported positive EPS growth of 14.45% in the latest data, this growth may not sufficiently support its premium pricing, especially compared to industry averages.
Adding to the valuation concerns is that Visa is also battling other challenges, such as growing expenses and regulatory risks. For instance, the financial company’s operating expenses rose 11.7% in 2023 and 10.8% in 2024, while client incentives, reducing revenue, jumped 19.4% and 11.9% year-over-year.
The payment giant is also dealing with legal matters, including a major U.S. antitrust lawsuit and potential fee caps in the U.K. The Credit Card Competition Act 2023 could also disrupt its dominant market position.
Meanwhile, some Wall Street analysts maintain an optimistic outlook for Visa despite the current valuation threat. For instance, TD Cowen raised Visa’s price target to $382, maintaining a ‘Buy’ rating and highlighting the company’s strong market position and strategic shifts toward unbundled solutions.
On the other hand, BMO Capital Markets reaffirmed an ‘Outperform’ rating with a $370 target, emphasizing Visa’s growth potential in consumer payments and its competitive edge in non-card payments.
By press time, Visa was trading at $362.71, a new all-time high reflecting a 15% year—to—date growth.
While VeriSign and Visa appear overvalued, they could justify their prices if they meet growth projections. However, given current risks, investors should proceed with caution.
Featured image via Shutterstock
