Skip to Content
Stock Strategist

The Market's Most Overvalued Stocks

Consider selling these pricey shares.

Mentioned: , , , , ,

Equity valuations as a whole barely budged in 2005, but the market remains a bit on the pricey side when compared to Morningstar's collective fair value estimates (To see more on Morningstar's perspective on market valuations, check out our Market Valuation Graph). The median stock in our coverage universe of 1,700 stocks is now trading at nearly a 10% premium to our estimate of its fair value. However, within our overall coverage universe, there remain plenty of stocks that are trading at significant discounts or premiums to our fair value estimates.

For today's Stock Strategist, we'll take a look at some stocks at the high end of the range: those trading at prices more than 2 times our estimate of the company's underlying fair value. Nearly 100 stocks were pricey enough to pass this screen as of Jan. 11, 2006. All of these stocks are expensive enough that we'd consider selling them, but we narrowed the list a bit further by screening for stocks lacking an economic moat and showing an above-average level of business risk.

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

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.