It’s Time to Take Profits in These Very Overvalued Stocks
Trading at big premiums, these are stocks to sell.
Susan Dziubinski: Hi. I’m Susan Dziubinski, co-host of The Morning Filter podcast. On a recent episode, Morningstar’s Chief US Market Strategist Dave Sekera identified three stocks that look very overvalued today that he thinks investors should take profits in. Those stocks are Ciena CIEN, Sandisk SNDK, and IREN IREN.
Today, we’re looking at three more significantly overvalued stocks. Given their prices, investors might want to lock in at least some of their gains on these names.
3 Overvalued Stocks to Sell
The first overvalued stock to take profits in is Keysight Technologies. Morningstar thinks the company has the strongest and broadest communications testing capabilities in the market; as a result, Keysight earns a wide economic moat rating. AI infrastructure investments for chips and networking, along with higher defense spending and defense modernization, are generating impressive growth for the company in the short term. But we think the stock has gotten ahead of itself: Keysight trades well above our $220 fair value estimate.
Read Morningstar’s full report on Keysight Technologies.
The second overvalued stock to take profits in is XPO. XPO is a leading transportation company specializing in less-than-truckload freight shipping across North America. The stock has rallied during the past 12 months thanks to the company’s impressive margin expansion, and Morningstar expects demand to recover later this year. But shares look priced to perfection today. We assign XPO’s stock a $123 fair value estimate.
Read Morningstar’s full report on XPO.
The final overvalued stock to take profits in is Wesco International. The company’s data center solutions division has driven impressive sales growth for this narrow-moat company, and we think Wesco can significantly outgrow GDP so long as new construction remains strong. As a beneficiary of the data center buildout boom, the stock has rallied hard during the past 12 months and looks overpriced. We think Wesco’s stock is worth $240, and it trades well above that.
Read Morningstar’s full report on Wesco International.
For more stock ideas, be sure to tune into The Morning Filter each week, wherever you get your podcasts. And visit Morningstar.com, too.
Morningstar senior analysts William Kerwin and Matthew Young and analyst Nicholas Lieb provided the research behind this segment.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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