Hells Bells - 2 Strong Sells

Summary

• On Wall Street, fortunes are made by "buying right and holding on." However, if you grossly overpay for even the world's highest quality companies, you court disaster.
• Today WST and AAPL represent two amazing blue-chip companies, with hyper-growth potential for many years to come. But WST and AAPL are 115% and 86% overvalued, respectively.
• Analysts expect them to deliver 22% and -7% total returns over the next five years. On a risk-adjusted basis, WST and AAPL are terrible investments today.
• In contrast, FB and AMZN represent hyper-growth blue-chip investing at attractive valuations. FB and AMZN are 16% and 26% undervalued, respectively.
• Analysts expect 154% and 203% returns from FB and AMZN over the next five years, respectively, compared to 33% from the 30% overvalued S&P 500.
• This idea was discussed in more depth with members of my private investing community, The Dividend Kings. Learn More »

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The broader market is highly overvalued, it doesn't take a genius to figure this out.

According to JPMorgan the market's 25-year average forward PE is 16.7 and today it's 21.8, meaning the market is historically about 30% overvalued.

The good

Analyst’s Disclosure:I/we have a beneficial long position in the shares of AAPL, AMZN, FB either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

DK owns AMZN and FB in our portfolios.