In the spirit of Halloween, we're profiling spooky-expensive stocks. Specifically, we've uncovered the 10 most overvalued names in our coverage based on their price/fair value ratios. (We excluded extreme uncertainty stocks.)
Notably, all of the stocks on the list except Ferrari (RACE) carry high or very high uncertainty ratings. The uncertainty rating represents the predictability of the company's future cash flows and, therefore, the level of certainty we have in our fair value estimate of that company. Some types of companies have less predictable cash flows than others and carry higher uncertainty ratings. Firms in more economically sensitive industries, including auto manufacturers, retailers, and restaurants, generally carry higher uncertainty ratings. So, too, do companies in highly disruptive sectors such as technology and communication services.
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Susan Dziubinski does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.