A rising tide lifts all boats...
The Federal Reserve left interest rates unchanged last week but strongly signaled it could still tighten monetary policy by the end of the year. The Nasdaq rallied immediately following Wednesday’s announcement and posted back-to-back record setting sessions.
Stock valuations continue to inflate as the overall market moves higher. With seven S&P 500 companies expected to report earnings this week, there are two that investors should keep a close eye on.
2 Overvalued S&P 500 Stocks
Value investors may want to re-visit any positions on Cintas (CTAS) and Pepsico (PEP). According to finbox.io data, each stock is overvalued going into earnings this week.
<img src='http://res.cloudinary.com/finbox/image/upload/v1474824493/CTAS_PEP_lit6j7.jpg' alt= ‘CTAS and PEP Fair Values’>
Other Low Margin Of Safety Stocks
Here are three more stocks outside the S&P 500 that also appear overvalued prior to reporting earnings this week.
Neogen's (NEOG) valuation models imply a fair value of approximately $37 and a negative 37% margin of safety.
<img src='http://res.cloudinary.com/finbox/image/upload/v1474824488/NEOG_ndh0lz.jpg' alt= ‘NEOG Fair Value’>
Vail Resorts (MTN) also appears to be more than 30% overvalued.
<img src='http://res.cloudinary.com/finbox/image/upload/v1474824487/MTN_lcasch.jpg' alt= ‘MTN Fair Value’>
Thor Industries' (THO) fundamental analysis implies a fair value close to $70 per share.
<img src='http://res.cloudinary.com/finbox/image/upload/v1474824490/THO_h6d8tr.jpg' alt= ‘THO Fair Value’>
Value investors may want to stay clear of the low margin of safety stocks listed above. Their valuations are getting stretched to levels not supported by the company's underlying fundamentals.
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Article written by Matt Hogan.
Investors are always reminded that before making any investment, you should do your own proper due diligence on any name directly or indirectly mentioned in this article.