Overvalued Stocks Alert: 11 Companies Now Trading at High Premiums
Intercontinental Exchange, RELX, and others make the list of newly overvalued stocks as market valuations climb.
The U.S. stock market remains moderately overvalued, and recent evaluations by Morningstar analysts have identified 11 newly overvalued stocks for the week ending February 7. These stocks have seen their Morningstar Ratings drop to 2 stars, signaling that they are trading above their fair value estimates. Additionally, five stocks have moved into 1-star territory, indicating extreme overvaluation.
Market Overview: A Rising Overvaluation Trend
The Morningstar U.S. Market Index dropped 0.25% in the past week, yet stocks continue to trade at a premium. Currently, 27% of the 855 U.S.-listed stocks under Morningstar’s coverage are overvalued, while only 34% are considered undervalued.
Top Newly Overvalued Stocks (2-Star Ratings)
The five most notable stocks that have become overvalued include:
• Intercontinental Exchange (ICE): Trading 13% above its fair value estimate of $148 per share. The stock has gained 31.87% over the past year.
• RELX (RELX): Currently 7% above its fair value estimate of $46.75 per share, with a 23.07% gain over the past year.
• Welltower (WELL): Up 68.23% over the past year, now trading 14% above its fair value estimate of $125 per share.
• Atlassian (TEAM): Trading 16% above its fair value estimate of $270 per share, after a 50.04% yearly gain.
• Intesa Sanpaolo (ISNPY): Up 60.23% over the past year, trading at a 19% premium to its fair value estimate of $22.68 per share.
Extreme Overvaluation: The New 1-Star Stocks
Five stocks have moved from a 2-star to a 1-star rating, meaning they are now significantly overvalued. The most prominent among them include:
• Waste Connections (WCN): Trading 29% above its fair value estimate.
• Interactive Brokers (IBKR): Currently 65% overvalued, with a 146.26% gain over the past year.
• XPO (XPO): Trading 65% above fair value despite a recent 1.61% loss in three months.
• Antero Resources (AR): 58% overvalued, after a 77.20% increase over the past year.
• Choice Hotels International (CHH): Up 27.82% in a year, now trading 36% above fair value.
What This Means for Investors
Stocks rated 3 stars are considered fairly valued, while 4- and 5-star ratings indicate undervaluation. With more stocks moving into overvalued territory, investors should exercise caution before buying into these high-priced names. Morningstar analysts suggest that investors seek out stocks with 4- or 5-star ratings, which present better long-term value.
Intercontinental Exchange, RELX, and others make the list of newly overvalued stocks as market valuations climb.
The U.S. stock market remains moderately overvalued, and recent evaluations by Morningstar analysts have identified 11 newly overvalued stocks for the week ending February 7. These stocks have seen their Morningstar Ratings drop to 2 stars, signaling that they are trading above their fair value estimates. Additionally, five stocks have moved into 1-star territory, indicating extreme overvaluation.
Market Overview: A Rising Overvaluation Trend
The Morningstar U.S. Market Index dropped 0.25% in the past week, yet stocks continue to trade at a premium. Currently, 27% of the 855 U.S.-listed stocks under Morningstar’s coverage are overvalued, while only 34% are considered undervalued.
Top Newly Overvalued Stocks (2-Star Ratings)
The five most notable stocks that have become overvalued include:
• Intercontinental Exchange (ICE): Trading 13% above its fair value estimate of $148 per share. The stock has gained 31.87% over the past year.
• RELX (RELX): Currently 7% above its fair value estimate of $46.75 per share, with a 23.07% gain over the past year.
• Welltower (WELL): Up 68.23% over the past year, now trading 14% above its fair value estimate of $125 per share.
• Atlassian (TEAM): Trading 16% above its fair value estimate of $270 per share, after a 50.04% yearly gain.
• Intesa Sanpaolo (ISNPY): Up 60.23% over the past year, trading at a 19% premium to its fair value estimate of $22.68 per share.
Extreme Overvaluation: The New 1-Star Stocks
Five stocks have moved from a 2-star to a 1-star rating, meaning they are now significantly overvalued. The most prominent among them include:
• Waste Connections (WCN): Trading 29% above its fair value estimate.
• Interactive Brokers (IBKR): Currently 65% overvalued, with a 146.26% gain over the past year.
• XPO (XPO): Trading 65% above fair value despite a recent 1.61% loss in three months.
• Antero Resources (AR): 58% overvalued, after a 77.20% increase over the past year.
• Choice Hotels International (CHH): Up 27.82% in a year, now trading 36% above fair value.
What This Means for Investors
Stocks rated 3 stars are considered fairly valued, while 4- and 5-star ratings indicate undervaluation. With more stocks moving into overvalued territory, investors should exercise caution before buying into these high-priced names. Morningstar analysts suggest that investors seek out stocks with 4- or 5-star ratings, which present better long-term value.