Stock markets across the globe rose significantly last year – with emerging markets up 30% plus, the S&P 500 managing a return of 20% and even the FTSE 100 gaining 7.6%.
But a buoyant market can leave some stocks trading at significantly more than their fair value estimate. There are four UK stocks under Morningstar equity analysts’ coverage which are currently considered to be significantly overvalued. These stocks carry a one-star rating, meaning they are trading at a premium to their fair value.
Anglo American (AAL)
Global mining giant Anglo American's portfolio spans many commodities and continents. Like fellow large diversified miners, Anglo has significant exposure to copper, coal, and iron ore, but it is unique in its significant platinum output, which accounts for roughly 40% of the annual global supply. Anglo also owns 85% of De Beers, in most years the world's largest supplier and marketer of rough gem diamonds.
Direct Line Insurance (DLG)
Direct Line Insurance Group was incorporated in 1988 as the first personal lines insurer to serve the UK market through direct only, using the telephone. It is now one of the largest UK mainstream personal lines insurers selling motor, home, and rescue insurance. It also has a small commercial business unit serving small to medium-size enterprises.
Intertek Group (ITRK)
FTSE 100 firm Intertek is one of the largest and oldest companies in the testing, inspection, and certification industry. The company’s primary activities involve testing products and materials, inspecting sites/industrial equipment, and certifying products and systems to ensure global/company standards.
Intertek is one of only four TIC companies that operate globally across numerous industries. The firm listed in 2002, following a divestment by Charterhouse. It employs more than 41,000 people worldwide.
Rio Tinto (RIO)
Rio Tinto searches for and extracts a variety of minerals worldwide, with the heaviest concentrations in North America and Australia. Iron ore is the dominant commodity, with meaningful contributions from aluminium, copper, diamonds, energy products, gold, and industrial minerals.
The 1995 merger of RTZ and CRA, via a dual-listed structure, created the present-day company. The two operate as a single business entity. Shareholders in each company have equivalent economic and voting rights.
