Susan Dziubinski: I’m Susan Dziubinski, co-host of The Morning Filter podcast. On a recent episode, Morningstar chief US market strategist Dave Sekera named three stocks he thinks investors should sell in November: Citibank C, Progressive PGR, and eBay EBAY. You’ll find a link to the podcast episode below if you want to know why Dave thinks these stocks are sells.
Watch The Morning Filter Podcast
3 Stocks to Sell and 3 Stocks to Buy in November
But today, I’m talking about three more stocks that look like sells, according to Morningstar. In fact, these are among the most overvalued stocks that Morningstar’s analysts cover.
3 Overvalued Stocks to Sell
- Delta Air Lines DAL
- Hims & Hers HIMS
- Walmart WMT
The first stock to sell on our list is Delta Air Lines DAL. Delta generates the highest revenue yield in the North America market and commands an outsize share of industry profits. The fortunes of this premium airline are tied to continued demand for travel experiences from well-heeled consumers. While Morningstar’s outlook for US airlines is rosy near-term, we do expect a return to more-normalized operating conditions over time—where competition over price will heat up, which will erode airline profitability. Given that, we think Delta’s stock is significantly overvalued today relative to our $32 fair value estimate.
Read Morningstar’s full report on Delta Air Lines.
The next stock to sell is Hims & Hers HIMS. The stock of this telehealth company has had a phenomenal run during the past few years. And the firm has continued to put up strong numbers: In fact, Hims & Hers delivered 49% year-over-year revenue growth in the third quarter. However, the company is experiencing a decrease in sequential subscriber growth, and we think headwinds from low barriers to entry, fierce competition, and challenges in international expansion threaten management’s revenue targets. We think the stock is very overvalued today and worth $25 per share.
Read Morningstar’s full report on Hims & Hers.
The final stock to sell on our list today is Walmart WMT. Yes, Walmart. True, Walmart is the world’s largest retailer. And its vast store network and developing digital presence have allowed the company to carve out a wide economic moat that’s unlikely to erode any time soon. Still, we think that the intense competitive landscape will constrain gross margins; and in fact, we recently trimmed our fair value estimate of the stock as a result. We think the market is expecting outsize margin gains, and Walmart’s shares look terribly overvalued relative to our $60 fair value estimate.
Read Morningstar’s full report on Walmart.
For more stock ideas, be sure to tune into The Morning Filter each week, wherever you get your podcasts. And visit Morningstar.com, too.
Morningstar analysts Brett Husslein, Keonhee Kim, and Nicolas Owens contributed the research behind this segment.
Subscribe to The Morning Filter on Apple Podcasts, or wherever you get your podcasts.
Watch The Best Warren Buffett Stock to Buy Now: Coca-Cola vs. American Express for more from Susan Dziubinski.
