5 Overvalued UK Stocks

Famed value investor Warren Buffett sells stocks once they become overvalued. Using Morningstar ratings we reveal the UK companies that look expensive

Emma Wall 20 December, 2013 | 11:32AM

Warren Buffett made his millions following the rules of value investing. Value investing is the art of buying stocks for less than their intrinsic value.

Businesses that have low cyclically adjusted P/Es are potential buys, and once P/Es rise those stocks get sold off.

"We fish in particular ponds of cheap stocks. Businesses often are cheap for a reason, but is that a good reason?  As value investors, we frequently find it's not," says value investor Nick Kirrage, fund manager at Schroders. "By investing in those businesses, when they're very out of favor, you can make significant returns for clients."

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
BT Group PLC105.75 GBX2.08
Prudential PLC1,204.50 GBX1.77
Rolls-Royce Holdings PLC252.60 GBX-0.20
Sainsbury (J) PLC189.45 GBX0.24
United Utilities Group PLC902.80 GBX0.13

About Author

Emma Wall  is former Senior International Editor for Morningstar

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