Amazon, Apple and Google Now Overvalued

NEW YORK (TheStreet) -- The high-flyers Amazon (AMZN) and Apple (AAPL) began the week setting new all time highs at $260.00 and $683.29 respectively. Google (GOOG) set a multi-year high at $712.81 vs. its all time high at $747.24, set during the week of Nov. 9, 2007.

Will Apple see an even higher high today as Apple enthusiasts await the announcement of the iPhone 5?

Amazon reached its new all-time high Monday as the company revealed that their high-definition 7-inch Kindle Five will begin being shipped this week, and that other models will ship in November.

Meanwhile, Google won the race against Apple to reach $700 a share, and this morning we learned that a half a billion Android devices have been activated around the world.

With the S&P 500 setting new multiyear highs this week, and with the yield on the U.S. Treasury 30-Year bond rising to 2.91% this morning, www.ValuEngine.com shows that valuations are becoming less undervalued and more overvalued then they were at the June 4 low for the S&P 500.

ValuEngine shows that 55% of all stocks are undervalued down from 81% on June 4. Twelve of 16 sectors are now overvalued: utilities by 15.9%, retail-wholesale by 11.5%, finance by 11.1%, consumer staples by 11.1% and medical by 10.9%. Back on June 4, 14 of 16 sectors were undervalued. The yield on the 30-year bond was 47 basis points lower on June 4 at a record low of 2.44%.

Even the "go-go" momentum names are affected by these metrics, but this morning all three remain "4-Engine" Buy rated according to www.ValuEngine.com. These names have become overvalued fundamentally, and are also overbought technically on their weekly charts.

When I see this type of pattern develop, I advise investors to book profits by paring positions and then employ "but and trade" strategies moving forward on these names as long as they maintain their buy ratings.

Amazon.com ( AMZN) ($255.67) is rated Buy according to ValuEngine with fair value at $163.62, which makes the stock 56.3% overvalued. The ValuEngine one-year price target is $268.58. Amazon is up 21.0% over the past 12 months, and is on the cusp of a downgrade to Hold. The stock has a crazy P/E ratio at 164 times 12-month forward analysts' estimates.

My semiannual value level is $236.23 with a monthly risky level at $266.82. The daily chart below shows overbought momentum with the stock well above its 21-day, 50-day and 200-day simple moving averages at $244.98, $234.39 and $206.22.

Courtesy of Thomson Reuters

Apple ( AAPL) ($660.59) is rated Buy according to ValuEngine with fair value at $609.12, which makes the stock 8.5% overvalued. The ValuEngine one-year price target is $700.63.

Apple is up 75.8% over the past 12 months and has a reasonable 12.8 P/E ratio. My quarterly value level is $602.77 with a weekly pivot at $675.99 and monthly risky level at $769.54.

The daily chart below shows declining momentum with the stock holding its 21-day simple moving average at $660.53 at Tuesday's close, and well above its 50-day and 200-day simple moving averages at $628.59 and $545.07.

Courtesy of Thomson Reuters

Google Inc ( GOOG) ($692.19) is rated Buy according to ValuEngine with fair value at $608.54, which makes the stock 13.8% overvalued. The ValuEngine one-year price target is $729.83.

Google is up 31.9% over the past 12 months and a so-so 18.0 P/E ratio. My monthly value level is $600.44 with a quarterly pivot at $705.10 and weekly risky level at $752.87. The daily chart below shows overbought momentum with the stock well above its 21-day, 50-day and 200-day simple moving averages at $680.26, $638.30 and $616.69.

Courtesy of Thomson Reuters

How to Use my Value Levels, Pivots and Risky Levels

Value Level: The price at which to enter a GTC Limit Order to buy on weakness to initiate a new long, add to an existing long, or to begin to cover a short position. 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: The price at which to enter a GTC Limit Order to sell on strength to book a profit on long positions, or to build short positions.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.

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