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Market Update

Our Take on 2001's Best-Performing Stocks

Many are selling above our fair value estimates.

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In a tumultuous year for stocks, most equity investors had to cope with losses, rather than gains. But for those fortunate enough to own shares in a handful of security-software companies, online travel firms, and online florists, it was definitely a year to remember. (In fact, two stocks from this group, Office Depot (ODP) and Service Corp. International (SRV), were holdings in our Tortoise Portfolio, a model portfolio that appears in Morningstar StockInvestor.)

Now that these stocks have already had huge runups, we think more caution is warranted. Although companies such as (MCAF) and (FLWS) still have good prospects for growth, price risk is becoming much more of an issue; as the table below illustrates, many of these stocks are now selling above Morningstar's estimate of their fair value and therefore receive below-average star ratings. To find out more about our take on 2001's standouts, Premium Members can click on the Analyst Report links below.

Morningstar Analysts does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.