Is it Time to Sell these Stocks?

THE VALUE INVESTOR: These stocks are rated two-stars by Morningstar equity analysts meaning they are overvalued. Is it time to sell?

Emma Wall 18 March, 2014 | 4:19PM

Do you invest for growth or income? Investors looking for growth use a share’s true value to determine whether it should be added to their portfolio or not. If a share is undervalued it appeals to the growth investor – and when the share price rises to, or exceeds, this true valuation it can be a trigger to sell some or all of the stock.

Morningstar equity analysts use their research to determine a share’s Fair Value, and from this they award it a star rating. A stock with a five star rating is trading at significantly less than its Fair Value – and one that has been awarded one star is considered by analysts to have a share price much greater than the Fair Value estimate.

There are no one-star stocks trading on the UK stock market, but there are several two-star stocks. Some of these pay an attractive dividend, and so may be held in a portfolio after their share price has risen. The five stocks below have been awarded a two-star rating, which could be a trigger for investors to consider trimming their position and taking some profit.

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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
Hikma Pharmaceuticals PLC1,964.00 GBX5.14
Reckitt Benckiser Group PLC6,010.00 GBX0.67
Sage Group (The) PLC590.00 GBX-1.67
Smith & Nephew PLC1,427.50 GBX1.78

About Author

Emma Wall  is former Senior International Editor for Morningstar

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