Stocks have been red-hot so far in 2024. So much so that a handfull of names have already reasched their 2024 Fair Values.
A year ago I was seeing values galore. But right now I’m seeing the opposite. This stock market has gotten too easy where dumb money is making money — a lot of it.
So here’s 5 examples of stocks that I feel have little to gain for the rest of the year.
Note, these charts are one-year charts, with quarterly profit growth along the bottom. The Estimated Long-Term Growth Rate is what analysts think profits can grow at during the next 3-5 years.
Chipotle (CMG) is really a fantasic stock. But the shares have soared so much the stock has a 49 P/E. In other words, the company is selling for 49x 2024 profits. Fourty nine years worth of profits is a bit rich.
I feel the P/E should be 35 and the stock is worth $1868 a share.
Still, although I feel CMG is too high, I still own the stock in my Growth Portfolio.
I don’t mind waiting on a fast grower like CMG stock because I feel eventually the profit growth is so strong the stock is likely to rise anyway (at least that’s my reasoning).
Costco (COST) is not a stock I was willing to hang around for, as its profit growht is projected to be much slower.
When I did my report on COST in January, the stock was overvalued by 15%. Since the company is maybe a 10% grower profit-wise, it might take a year-or-two for the stock to grow profits to the point where I felt the stock was reasonable.
I wasn’t willing to hang around, and sold COST from my Conservative Growth Portfolio earlier this year.
Like many retailers, Tractor Supply (TSCO) was making money when inflation was high.
50% of 2022 revenue was from the company’s Livestock & Pet category, which consists of pet and livestock food, as well as health items and fencing, among other things.
TSCO had profits surge when prices shot up 10% in a year. That was added revenue for delivering perhaps the same ammount of product.
Now sales are suffering, and the stock seems Fairly Valued.
Lockheed Martin (LMT) was supposed to be delivering higher profits seeing as though its receiving a lot of revenue from escellating tensions in the Europe and Asia.
Instead, profit gtowth is meh and the stock has very little upside.
I sold LMT from the Conservative Growth Portfolio recently. I think I can find doubld-digit growers to invest the proceeds in.
Five quarters ago, in Decelmber 2022, I wrote Apple (AAPL) could be dead money for a while and the stock might be sitting around that price ($151) in a year.
Here we are 15 months later and the stock has proven me wrong as it was $189 in hte latest quarter. That’s a nice bump! Bit it comes with a price.
Since then, the stock’s P/E ratio has risen from 24 to 29. So the shares are more expensive.
But looking ahead, analysts estimate just 7% profit growth this year. A 29 P/E is high for that little growth. This stock could be around this level for the next year — or even two.
So I sold AAPL from the Conservative Growth Portfolio earlier this month.
