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Commentary

Don't Pay Up for These Stocks

These no-moat stocks don't provide an appropriate margin of safety in today's market.

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Stocks continued on their upward run last week. The market seems to be betting that corporate profitability will continue to look fairly strong and that the Fed is not going to take its foot off the monetary pedal too soon. And we got some evidence during the week that both supported and challenged this thesis. 

Given some of the conflicting signals earnings and data are showing, do the underlying fundamentals of the market support the big rally that we've seen? (The Morningstar US Market Index is up 17% so far in 2013.) For the most part, yes. But valuations across sectors and companies are starting to separate more, and security selection is becoming increasingly more important.

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