After plunging to three-and-a-half-year troughs earlier this month at 5,535 points, frothy investor appetite has shunted the FTSE 100 (INDEXFTSE: UKX) to its highest levels in 2016 in recent days. Indeed, the index closed Thursday's session around a fairly heady 6,100 points.
Still, the rapid ascent of the UK's prime index has been fuelled by an upsurge in many stocks that I would consider already-expensive due to their poor growth prospects.
The commodities sector
A meaty recovery in commodity prices over the past month has been the main driver behind the Footsie's exceptional rise.
Brent crude values have surged from lows of $27.67 per barrel punched back in January (the cheapest level since 2003) and the commodity was recently changing hands just shy of $37. And bellwether metal copper has galloped back above the $4,800 per tonne marker to levels not seen since the autumn.
A consequent surge back into resources stocks has seen Anglo American (LSE: BLT), BHP Billiton(LSE: BLT) and Rio Tinto(LSE: RIO) emerge as three of the FTSE 100's biggest winners during the past month.
But with all three expected to endure further heavy earnings woes in 2016 and possibly beyond, these bumps higher have made the stocks far too expensive in my opinion as supply/demand dynamics worsen across key commodity classes.
An anticipated 60% earnings slide in fiscal 2016 for Anglo American results in a P/E ratio of 25.1 times, far above the benchmark of 10 times that reflects high-risk stocks. Meanwhile, predicted earnings dips of 49% at Rio Tinto and 85% at BHP Billiton result in heady multiples of 22.6 times and 66 times, respectively.
And investors can't put faith in huge dividends to offset these value shortfalls either. Anglo American elected to bin the payment last year owing to its weak balance sheet and poor revenues outlook. And similar drastic action is expected to be followed by other mining and energy giants including BHP Billiton and Rio Tinto in the near future.
I believe that the FTSE 100's supermarkets are also far too expensive relative to their bottom-line prospects.
Sure, Morrisons (LSE: MRW) may be about to re-enter the FTSE 100 later this month as part of the latest quarterly reshuffle. But I believe the return may prove fleeting amid rising deflationary woes and continued market share grabs by Aldi and Lidl.
City forecasts suggest that the Bradford firm will enjoy a 20% earnings bounce in the year to January 2017, while rival Tesco (LSE: TSCO) is predicted to record an 81% rise in the period to next February.
I reckon that these projected rebounds will prove disastrously inaccurate however, as competition in the supermarket segment worsens. But even if these figures do come to pass, subsequent P/E ratings of 21.5 times for Tesco and 18 times for Morrisons can hardly be as described as attractive value for money.
Meanwhile, prospective dividend yields of 3% for Morrisons and 0.6% for Tesco both lag the wider FTSE 100 average of 3.5% by a distance. As a consequence, I believe that both stocks are strong candidates for a hefty share-price correction.
But while the stocks discussed offer pretty poor bang for your buck, I believe there are still plenty of brilliantly-priced London stocks waiting to supercharge your stocks portfolio.
With this in mind, I strongly recommend you check out this special Fool report that could help you become a market millionaire!
Our Ten Steps To Making A Million In The Market report highlights a number of fast-growth small-caps and beaten-down bargains that could be set to deliver tenfold returns.
Click here to enjoy this exclusive 'wealth report.'It's 100% free and comes with no obligation.
Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Rio Tinto. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.