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Sell alert: This is the most overvalued S&P 500 stock of 2024

Sell alert: This is the most overvalued S&P 500 stock of 2024

While the first quarter of 2024 has generally been exceptionally strong for the stock market, the April downturn showcased that the fever pitch might have run a bit too high.

Whatever the case may be, multiple companies have seen their shares rise in a fashion usually reserved solely for penny and meme stocks, and cryptocurrencies and have surged hundreds of percent year-to-date (YTD).

The trend that perhaps started raising some eyebrows came when $50+ daily price changes for established blue-chip companies like Nvidia (NASDAQ: NVDA) became relatively commonplace and led to many stocks becoming regarded as exceptionally overvalued.

Still, some stand out significantly more than others.

Indeed, few have had a rise as stellar – and arguably concerning – as Super Micro Computer (NASDAQ: SMCI), which started the year at $285.45 and surged 225.27% to $928.48 in just under four months.

Such performance led to SMCI ranking as the most overvalued company on the benchmark S&P 500 index with a premium estimated at 173%, a forward price-to-earnings ratio (P/E) standing at 32.9 and the average 5-year P/E at 12.1.

The most overvalued S&P 500 stocks. Source: FactSet

SMCI rated as buy despite high premium

Despite its ranking as the number 1 most overvalued company of the S&P 500 index, technical analysis (TA) still rates SMCI stock as an overall buy when based on most common time frames.

Indeed, the overall reading turns neutral only when the latest 24 hours of trading are assessed – and moving averages (MA) turn from ‘strong buy’ to ‘sell’ on said time frame.

Oscillator readings are, however, generally less bullish and show a ‘sell’ rating when based on the last 30 days and are ‘neutral’ on the analysis of the weekly and daily charts.

SMCI stock technicals based on the last 24 hours of trading. Source: TradingView

SMCI stock price chart

Looking at SMCI’s staggering 2024 rise, its positioning as the most overvalued stock hardly comes as a surprise. 

Indeed, after a slow climb for much of the last 52 weeks – a slow climb that, combined with the most recent surge, saw the shares increase 745.46% in value – Supermicro rocketed by 225,27% in just a handful of months in 2024.

SMCI stock 52-week price chart. Source: Google

Additionally, despite the overall slowdown and correction of April, SMCI is nonetheless 1.92% in the green in the last 30 days. 

The weekly chart is also positive as the time frame saw a 0.92% climb, though the latest full trading day saw a substantial 3.29% drop to $928.48.

SMCI price today, at press time, stands at $917.50 after an additional 1.90% extended session decline.

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