NEW YORK (TheStreet) - Earnings season has been quite treacherous for overvalued stocks as companies that miss analysts' estimates or offer cautious guidance will likely take significant share price haircuts.
The eight companies I profile today include three from the finance sector, including two members of the regional bank index. The third is the diversified insurance company, asset manager and Dow component Travelers (TRV). The finance industry is 22.3% overvalued with an equal-weight rating as 83.8% of the 2961 stocks in the sector have hold ratings, according to www.ValuEngine.com.
Two companies are in the oils-energy sector, which is 14.6% overvalued with an equal-weight rating, as 61.4% of the 539 stocks in the sector have hold ratings. A warning is that 27.3% have sell ratings and only six stocks have buy ratings.
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Dow component Johnson & Johnson (JNJ) is the representative from the medical sector, which is the most overvalued sector by 38.8%. The medical sector has an equal-weight rating as 56.3% of the 764 stocks in the sector have hold ratings. Only 7.2% have buy ratings and 32.1% have sell ratings.
One is in the transportation sector, which is 33.3% overvalued with an underweight rating as 72.9% of the 170 stocks in the sector have sell or strong sell ratings. Only 4.7% have buy ratings.
Dow component Verizon (VZ) is the representative from the utilities sector, which is 12.9% overvalued with an overweight rating as 91.4% of the 210 stocks in the sector have buy or strong buy ratings. There are only 125 stocks among 8,081 stocks in the ValuEngine universe with strong buy ratings and 78 are utility stocks. This is a warning to investors to be cautious and consider dividend stocks.