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January 13, 2023 at 03:48 PM
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As of Jan. 9, Morningstar analysts considered 130, or 15%, of the 847 U.S.-listed stocks they cover overvalued, Jakir Hossain, an associate data journalist, wrote in a blog post this week.
One year ago, nearly twice as many stocks, 253, were overvalued compared with analysts’ fair value estimate.
Hossain noted that overvalued stocks are widespread in certain sectors, but few and far between in others. For example, 46% of Morningstar’s utilities coverage is overvalued, and another 43% is at fair value.
Contrast that with communication services stocks, only 4% of which analysts consider expensive, and real estate, with only 5% considered expensive.
To identify the most overpriced stocks, Morningstar ran a simple screen that sorted all 847 stocks in its coverage by their price-to-fair-value ratio, a data point that divides a stock’s price by its Morningstar Fair Value Estimate. Analysts typically view stocks with ratios that are greater than 1.0 as overvalued, and those under 1.0 as undervalued.
See the gallery for the 10 most overvalued stocks, with their Morningstar star and moat ratings noted.
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