NEW YORK ( TheStreet) -- My suggested allocation to stocks has been at a maximum of 50% focusing on utilities, brand name retailers and the buy-rated stocks in the Dow industrial average. The 15 buy-rated names in the Dow 30 provide this diversification. Among the 15 are three retail-wholesale stocks, two consumer staples stocks, four medical stocks, three multi-sector conglomerates, two utilities and one in the computer & technology sector.
On March 25 I wrote,
9 Consumer Staples Stocks at Risk of Reversion which included the buy-rated names in the Dow 30. On March 26 I wrote,
Allocate U.S. Holdings to 14 Top Dow Stocks and since then three of the computer and technology stocks profiled in this post are now rated hold not buy.
Today www.ValuEngine.com shows that 63.7% of all stocks are overvalued, just below the 65.0% ValuEngine Valuation Warning threshold. The six sectors represented by the 14 buy-rated Dow stocks are overvalued; computer and technology by 15.6%, consumer staples by 26.1%, medical by 11.5%, multi-sector conglomerates by 9.1%, retail-wholesale by 17.5% and utilities by 13.0%.
Among today's 15 Dow stocks, all are trading above their 200-day simple moving averages showing risk of reversion to the mean even with buy ratings. All are overvalued vs. their fair value, which is the price at which they should be trading. As buy-rated stocks all are projected to gain between 5% and 12% over the next 12 months, but beware that nine have gained more than 12% over the last 12 months.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV