It is a prudent investment policy to book profits or at least to pare back positions in sell-rated stocks to your initial dollar investment in a stock market where 77.6% of all stocks are overvalued, 44.5% by 20% or more.
For example, if you invested $5,000 in a stock and today that investment is worth $10,000 you have doubled your money. Selling half the position locks in a significant profit and you keep your initial $5,000 investment.
One stock is in the aerospace sector. This sector is 25.5% overvalued and rated underweight.
Two stocks are in the autos-tires-trucks sector. This sector is 32.1 overvalued and rated underweight.
Four stocks are in the basic materials sector. This sector is 1.2% undervalued and rated underweight.
One is in the computer and technology sector. This sector is 26.5% overvalued and rated overweight.
One is in the transportation sector. This sector is 26.4% overvalued and rated 'avoid-source-of-funds'.
All nine stocks profiled in this post are overvalued with seven overvalued by 25% or more. All nine have gained by double-digit percentages over the last 12 months, seven by 22.7% to 172.6%. All are trading above their 200-day simple moving average, which reflects the risk of reversion to the mean.
Reading the Table
OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.
VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.
Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.
Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.
Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.
Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.
Risky Level: Price at which to enter a GTC limit order to sell on strength.
At the time of publication the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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