3 Magnificent Stocks I'm Close to Buying, Even Amid a Historically Pricey Stock Market

Key Points

• It's been a banner year for the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite, with all three indexes galloping to multiple record-closing highs.

• Unfortunately, the stock market is very expensive, which heightens the risk of a significant correction, based on what history tells us.

• Three historically cheap stocks with well-defined catalysts are firmly on the buy radar.

• 10 stocks we like better than United Parcel Service ›

Despite periods of heightened volatility on Wall Street, it's turned into a banner year for the benchmark S&P 500 (SNPINDEX: ^GSPC), ageless Dow Jones Industrial Average, and growth-propelled Nasdaq Composite. All three major indexes have catapulted to multiple record-closing highs in 2025 in spite of dipping firmly into correction territory or a bear market (for the Nasdaq) in early April.

But while investor optimism is high, stock valuations are even higher.

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The S&P 500's Shiller price-to-earnings (P/E) Ratio, which is also commonly referred to as the cyclically adjusted P/E Ratio (CAPE Ratio), is closing in on a multiple of 40. This represents a more than 130% premium to the Shiller P/E's 154-year back-tested average and makes for the third-priciest stock market in history.

The previous two times stocks were as pricey as they are now -- prior to the dot-com bubble bursting in March 2000 and just days before the 2022 bear market kicked off -- led to respective declines of 49% and 25% in the S&P 500, with the Nasdaq tumbling 78% on a peak-to-trough basis from 2000 to 2002. Based solely on historical precedent, the stock market is due for a sizable correction, if not full-blown bear market in the presumed not-too-distant future.

Image source: Getty Images.

Yet even amid a historically pricey stock market, amazing deals can be found. While I've yet to pull the trigger on adding the following three magnificent stocks to my portfolio, it likely wouldn't take more than one meaningful down day for these stocks (or the broader market) for me to jump in.

United Parcel Service (UPS)

The first brilliant stock that's piquing my interest in a historically pricey market is none other than logistics titan United Parcel Services (NYSE: UPS), which most folks know as "UPS."

Shares of UPS plunged in January (and have continued their descent throughout the year) after announcing a business plan that would focus on margins over volume. It's planning to reduce its shipments from Amazon (NASDAQ: AMZN), its largest customer, by more than 50% come the second-half of 2026. For context, Amazon accounted for close to 12% of net sales for UPS in 2023. This revenue/forecast shock hasn't set well with investors.

However, UPS is reorganizing its operations with a purpose. The overwhelming majority of Amazon packages it handled generated low margins. Removing these packages from the top-line will have only a marginal and short-term impact on the company's bottom-line results. Keep in mind that job cuts and cost-savings tied to paring back its Amazon business will also buoy its operating margin.

Meanwhile, UPS is pivoting its focus to higher-margin opportunities. Though aggregate volume may drop, temporarily, without Amazon as its top customer, focusing its efforts on building out its shipping solutions/logistics for small- and medium-sized businesses, as well as temperature-controlled healthcare logistics, will provide more bang for UPS's buck, beginning as soon as next year.

Don't overlook the brand power of the UPS brown trucks, either. Very few companies have a logistics network that comes remotely close to rivaling UPS.

Lastly, the valuation and capital-return program have me very intrigued. UPS stock can be scooped up for less than 12 times forecast earnings per share (EPS) in 2026 and management appears committed to maintaining what's currently a 7.8% yield. Even if the dividend were halved, it would still be highly attractive.

Image source: Getty Images.

The Trade Desk

A second phenomenal stock that I've come within a stone's throw of buying is the worst-performing member of the S&P 500 in 2025, adtech company The Trade Desk (NASDAQ: TTD).

Whereas UPS has one very specific reason why it's tumbled this year, it's been a laundry list of bad news for demand-side digital advertising platform The Trade Desk. In no particular order, the company has dealt with:

• Criticism for slowing growth.
• Tariff concerns, which appear to be adversely impacting spending with a number of core advertisers.
• The departure of Chief Financial Officer Laura Schenkein after more than a decade with the company.
• Growing competition, with Amazon and Netflix announcing a global advertising partnership two weeks ago. Netflix being able to purchase ads through Amazon's programmatic platform is viewed as a lost opportunity for The Trade Desk.

In spite of these challenges, The Trade Desk appears to be well-positioned for long-term success.

For starters, ad-driven businesses benefit immensely from the nonlinearity of economic cycles. While the average U.S. recession has lasted roughly 10 months since the end of World War II, the typical economic expansion has endured five years. With ad spending ebbing-and-flowing with the health of the economy, it means The Trade Desk should enjoy disproportionate long-term growth.

Furthermore, there's been widespread adoption of The Trade Desk's Unified ID 2.0 (UID2) technology, which is used in place of third-party cookies to help advertisers target users with their messages. UID2 will be a critical puzzle piece to sustaining The Trade Desk's double-digit growth potential in connected TV. Consistent cord-cutting represents an expansive addressable market.

To keep with the theme, The Trade Desk's valuation now makes sense. Its forward P/E ratio of less than 21 represents a bargain with its annual growth rate likely to sustain/top 15% for the foreseeable future.

York Water

The third magnificent stock that I'm closing in on buying amid a historically pricey stock market is the "world's greatest dividend stock," water utility York Water (NASDAQ: YORW), which is a company most investors have probably never heard of before.

Shares of York are down 31% over the trailing-three-year period, likely due to investors being mesmerized by the rise of artificial intelligence (AI). When bull markets are steaming ahead, investors have an increased appetite for growth stocks and tend to pass up safer investments, such as utilities. The good news is this creates an opportunity for value-oriented investors to pounce.

The beauty of utility stocks is that they're incredibly predictable. Demand for water and wastewater services isn't going to change much from one year to the next.

What's more, utilities typically operate as monopolies or duopolies in the areas they service, which means little or no concern about other businesses poaching their customers. York Water's operating cash flow is highly predictable, which gives management the confidence to make bolt-on acquisitions and upgrade existing infrastructure without adversely impacting the company's profitability.

York also benefits from being a regulated utility, which means it needs to request rate increases from the Pennsylvania Public Utility Commission (PPUC). While this might sound inconvenient, it's actually great news as it ensures the company doesn't have to deal with wholesale pricing. York Water recently submitted a rate hike request with the PPUC that, if approved, will lift its annual revenue by a whopping 32%.

In terms of its dividend, no company can rival York Water. Only around two dozen public companies (on U.S. exchanges) have been paying a continuous dividend for at least 100 years. York leads them all with a 209-year streak of continuous payouts.

Rounding things out, York Water is historically cheap. Its forward P/E of 19 equates to a 34% discount to its average forward P/E ratio over the last half-decade.

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Sean Williams has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Netflix, The Trade Desk, and United Parcel Service. The Motley Fool has a disclosure policy.