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Stock Strategist

The Market's Most Overvalued Stocks

There are still expensive stocks in real estate.

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In our previous article on the market's most overvalued stocks, we highlighted large-cap stocks that still appeared expensive, despite our opinion that the overall asset class seemed cheap. For this installment, we chose to focus on real estate. Note that this category does not include homebuilders, but rather is dominated by real estate investment trusts and other financial-services firms that focus on real estate.

Although many companies in this arena appear to be selling at a significant discount to their intrinsic values (16 of the 220 as of this writing,  click here to run this screen), there are still several that trade at a premium. To parse these expensive stocks from the pack, we developed a screen to find real estate firms trading at or below 2 stars with no competitive advantages and average or greater-than-average risk.  The result was seven no-moat, average-risk stocks--all of which are REITs.

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