BALTIMORE (Stockpickr) -- Ask any self-respecting contrarian what's what these days and you're sure to get the same answer: The market's overvalued. But while most investors ponder which investments they should be getting into, they ignore the other end of the spectrum: the stocks they should avoid. On Wall Street, value has long been proven an effective method of investing, and over the years, analysts and academics have worked hard to develop the "best" models for determining the true per-share value of a stock.

The justification to invest in an undervalued play is simple enough: When a company's trading for less than it's worth, it's time to buy. But in this economic climate, with market participants only too ready to release their "inner bears," knowing when to sell could save you some serious money.

The first thing to remember about an overvalued stock is that value is fleeting. A company can be overvalued one day and a good value the next. As fundamentals and prices change, so too does the argument for "value." That said, these companies aren't "bad" stocks -- quite the contrary, a few are actually compelling companies. But just as you wouldn't buy a "good" car for more than sticker price, you should be wary of stocks that trade for more than they're worth.

These stocks have the furthest to fall if things turn sour again.

Here's a look at a handful of popular companies that are overvalued right now.

There's no question that Irish discount airline Ryanair ( RYAAY) has carved out an interesting niche of Europe's air transport market. The company has a novel approach to crew compensation, it only flies the venerable Boeing 737, and it only operates routes that it can handle efficiently. But all of those factors don't make up for the fact that this airline is currently sporting a P/E of 25.88 (vs. 1.74 for the industry) and trades for almost 15 times more per dollar of sales than its peers.

Airlines have been facing an uphill battle for the last decade, a fact that's been no secret to Wall Street. In the years since, investors have been conditioned to steer clear of airline stocks, responding to Richard Branson's old quote that the "best way to become a millionaire is to be a billionaire, then buy an airline." But the few who opted to stick with airlines in their portfolios have hardly been vindicated as the industry's valuation has fallen nearly 50% since highs of 2007, making overvalued options considerably less attractive right now.

And with the fallout from the Icelandic volcano ash still to be tallied, the downside could be bigger still. Ryanair stood out during the ash storm, which left flights in and out of Europe grounded for a week, because CEO Michael O'Leary said that the airline wouldn't provide financial assistance to stranded passengers (as it was required to do under EU law). The company quickly backpedaled under pressure from mounting EU fines and irate customers. Until shares reach more of a bargain valuation, stay clear of these shares.

Steel giant ArcelorMittal ( MT) is one of the biggest players in the industry right now, but significant headwinds are making the company considerably less attractive for investors looking for downside protection this month. As the largest steel producer in the world, the $47 billion Luxembourg registered company should be a blue chip bastion of safety -- but frankly, it's not.

ArcelorMittal currently trades at an earnings multiple of 28.20, 6.4 times higher than the rest of the steel industry. And while several of the company's other valuation metrics don't look quite as bad, its P/E is hard to overcome, particularly when it's having so much difficulty delivering decent earnings in 2010. Foundering steel prices, diminished demand, and an enormous debt load will continue to chip away at MT's profitability in the near term.

Adding ArcelorMittal to this list wasn't easy, because I actually like this stock quite a bit. The company has visionary management, size advantage and a well-established asset base. Even so, its present valuation is a nonstarter. It could become a worthwhile buy after a correction takes place.

High-end auction house Sotheby's ( BID) has a considerable amount of equity in its brand name. Unfortunately, it's that cache that's buoying shares of its stock right now, not its languishing fundamental performance. Sotheby's has been trying for the last couple of years to gain access to a bigger share of the auction action, but it's so far been unable to sway the downtrend in its sales since 2007.
Stockpickr: Who Owns Sotheby's?

In good times, the high-end auction business was the place to be. With bidders paying record prices for jewelry and fine art, big names such as Sotheby's were collecting enormous commissions to get pieces in the hands of buyers. But that kind of discretionary opulence took a foundation-shaking hit in 2008 as the economy crumbled. With shares trading for nearly four times sales and book value, investors are paying for the Sotheby's name, not its business.

Sotheby's is all but guaranteed to win a substantial amount of business back when the luxury auction world rebounds -- until then, however, this stock is at risk of tumbling considerably further.For more overvalued stocks, including Nuance Communications ( NUAN) and The Macerich Company ( MAC), check out the dedicated portfolio on Stockpickr.

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Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.

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