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Stocks with low P/E ratios are generally considered as trading at discounts and are thus welcomed by investors. On the other hand, stocks with high P/E ratios are relatively overvalued by the market and are more likely to suffer losses in the future. We think investors should avoid purchasing stocks with extremely high P/E ratios, especially those that were sold by corporate insiders recently.

Below we compiled a list of 10 stocks with the highest PE ratios insiders are selling. All companies have at least $2 billion market cap and were sold by at least one insider during the past month.

Ticker

Company

Insiders

P/E

CRM

Salesforce.com

2

5060

CPHD

Cepheid

1

377.89

MAC

Macerich Co.

2

363.93

DNKN

Dunkin' Brands Group, Inc.

7

353.43

QLIK

Qlik Technologies, Inc.

4

347.57

NUAN

Nuance Communications, Inc.

5

210.42

ASH

Ashland Inc.

3

113.51

HCN

Health Care REIT, Inc.

6

105.96

AMZN

Amazon.com Inc.

3

94.23

BXP

Boston Properties Inc.

1

92.95

Salesforce.com (NYSE:CRM) has the highest P/E ratio. Its P/E ratio is 5060 and its forward P/E ratio is also quite high: 62.47. The stock is sold by two insiders during the past month. Graham Smith sold 11500 shares at around $108 per share on December 15. Smith also sold 1000 shares at $122.31 and another 1000 shares at $125.17 per share on December 5. Craig Conway also sold 750 shares at $115.65 at the beginning of December. Today CRM is trading at $96.91 per share. There are 10 hedge funds tracked by Insider Monkey that sold out their stakes in CRM over the third quarter, including Jim Simons’ Renaissance Technologies and Ray Dalio’s Bridgewater Associates.

Dunkin' Brands Group Inc (NASDAQ:DNKN) has the highest number of insiders selling. It was sold by seven insiders in December. On December 9, Mark Nunnelly and six other insiders sold the stock at $24.7233 per share. Today DNKN is trading at $24.94 per share. It has a market cap of $3.0B and a high P/E ratio of 353.43. DNKN is not very popular among hedge funds tracked by us. There are only eight hedge funds with DNKN positions at the end of September.

Amazon.com Inc (NASDAQ:AMZN) is another stock with high P/E ratio that insiders are selling. There are three insiders who sold the stock during the past month. On December 15, Steven Kessel sold 3500 shares at $182. Mark Onetto also sold more than 50000 shares at prices ranging from $194.5101 to $198.0908 on December 5. Director Patricia Stonesifer also sold 5000 shares in total at around $193 per share at the beginning of December. It seems that these insiders made the right decision as AMZN is currently priced at $178.39. It has a market cap of $81.4B and a P/E ratio of 94.23. Jim Simons’ Renaissance Technologies and six other hedge funds sold out their AMZN stakes over the third quarter.

Other large-cap stocks with insanely high P/E ratios that insiders are selling include Health Care REIT Inc (NYSE:HCN), Boston Properties Inc (NYSE:BXP), Nusance Communications Inc (NASDAQ:NUAN), Macerich Co (NYSE:MAC), and Ashland Inc (NYSE:ASH). We think that investors should be careful about these stocks and consider uncovering some of these positions.

Source: 10 Stocks With High P/E Ratios That Insiders Are Selling