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4 Extremely Overpriced Stocks

We think these companies' share prices are pricing in overly optimistic expectations.

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When Morningstar analysts determine a company's fair value estimate, we focus on fundamentals such as a company's competitive advantages and cash flows--which we believe are crucial to valuing companies as businesses.

We believe that buying a stock means becoming part owner in a business and that over the long run, stock prices are ultimately driven by corporate financial performance. We base our fair value estimates for stocks on the present value of the company's future cash flows--not on stock-price momentum or investor sentiment. 

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