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.
Boeing ($117.51) set a new all-time high at $120.38 on Thursday. My monthly value level is $111.85 with no risky levels.
CSX ($26.20) set a multi-year high at $26.90 on Thursday. My quarterly value level is $17.41 with a monthly risky level at $28.41.
Du Pont ($59.41) set a multi-year high at $60.86 on Thursday. My quarterly value level is $43.42 with a semiannual pivot at $61.73 and semiannual risky level at $67.38.
Dow Chemical ($39.24) set a multi-year high at $41.08 on Thursday. My monthly value level is $35.71 with a semiannual risky level at $43.22.
Micron ($17.20) set a multi-year high at $17.59 on Thursday and has been downgraded to sell. Micron is also in my first post of the day since the company reports quarterly results on Thursday. My semiannual value level is $13.56 with a monthly pivot at $16.26 and no risky levels, but this stock was a victim of the year 2000 tech bubble with a high of $97.50 in July 2000.
Nucor ($49.88) set a multi-year high at $51.25 on Thursday. My monthly value level is $47.16 with an annual risky level at $65.23.
Rockwell ($106.93) set an all-time high at $109.72 on Thursday. My semiannual value level is $99.59 with a semiannual risky level at $111.04.
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.