Six Stocks to Avoid
Morningstar.com
Wednesday October 30, 5:00 am ET
By T.K. MacKay
"Well, that's easy for you to say," may be the words out of many investors' mouths these days when presented with a list of stocks to avoid. Any market, including a bear market, is rife with crummy companies that aren't worth a dime. However, many stocks our analysts follow are worth plenty, just a lot less than the market currently offers. Because Morningstar is an independent research company, we're not beholden to investment bankers to put a rosy glow on our opinions.
Below, you'll find six widely followed, industry-leading companies that we believe have substantially overvalued share prices. Whether it's deteriorating fundamentals, declining market share, or just plain irrational pricing, our analysts believe that the stocks below don't make the grade as smart investments right now. Some of these stocks are pricey enough that we believe they could be headed for a fall--possibly to prices at which they'd be a lot more attractive.
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Nokia (NYSE:NOK - News)
The cell-phone industry's growth has hit a wall, rendering Nokia's hypergrowth as history. The company's September quarter looked like the story of Dr. Jekyll and Mr. Hyde, and a recent run in the stock keeps us on the sidelines. We estimate the stock to be worth about $14 per share.
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Don't get us wrong: These are all great companies that have had a lot of success in the past. But a great company and a great stock are two different things. We think these stocks are just too pricey to make them worth buying right now.
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