Market's Running Hot? Here's Where to Park $1K Without Overpaying

The S&P 500 is trading at nose-bleed valuations right now—Shiller CAPE ratio near all-time highs, Buffett indicator (total market cap vs GDP) blowing past 200%. But here’s the thing: even in an expensive market, there are pockets where fundamentals still matter.

The Play: Energy & Credit

Three names catching eyes for different reasons:

EQT Corporation (EQT) — Trading at 13x forward earnings on $4.47 EPS next year. As the world ditches coal, natural gas is having its moment—stable baseload power that plays nice with renewables. U.S. LNG exports hit 11.9B cubic feet/day in 2024 and infrastructure keeps expanding. The thesis: rising demand from data centers, power generation, and export markets.

Expand Energy (EXE) — Born from the Chesapeake + Southwestern merger, now America’s biggest nat gas producer. The combo is firing: synergies jumped 50%, expecting $500M in annual efficiencies this year, another $600M next. Translation: 30% more free cash flow YTD, 20% next year. Forward valuation sits at 11.8x earnings ($9.63 EPS expected). Similar tailwinds to EQT.

Ares Capital (ARCC) — The BDC space took a bruising lately after some portfolio company blowups (First Brands, Tricolor). But ARCC’s $28B portfolio is diversified across industries, and it doesn’t have direct exposure to those specific failures. Stock got smacked down anyway—now trading near book value with a 9.5% dividend yield. If credit fears overblown, could be a sneaky income play.

The Vibe: When valuations are stretched, you hunt for sectors with real demand catalysts, not hype. Energy’s got that. BDCs are contrarian at the moment—could work if you’re patient.