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Stock Strategist

The Market's Most Overvalued Stocks

Large caps are cheap--but we'd avoid several at current prices.

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In our previous article on the market's most overvalued stocks, we targeted companies that remained overvalued despite being down significantly for the year. Recently though, stocks have rebounded. To honor the Dow Jones Industrial Average for recently surpassing its all-time high, we'll play the contrarian and highlight some overvalued stocks in our large-cap coverage universe.

First, a little background. On the whole, large-cap stocks remain cheap. We've noticed for quite some time that the large-cap portion of our 1,900-stock coverage universe has consistently traded at a larger discount to our fair value estimates than the small-cap portion. Although this gap has narrowed somewhat with large caps outperforming small caps by 4% (11% versus 7%) year to date, the discrepancy remains.

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

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