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5 Overpriced Stocks to Ditch Now

It's a fool's game to hold these stocks. Get out while you can.

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Bristol-Myers Squibb

stocks to sell bristol-myers squibb bmy

Bristol-Myers Squibb (BMY) was once a must-hold pharmaceutical/healthcare stock. Today, it’s a no-growth laggard that does generate good cash flow and a 2.7% yield.

The perception of safety is what drives investors to this stock, and the 2.7% yield isn’t gigantic, but decent enough for a retirement portfolio. The problem is that everyone has bought in using the same criteria, and the stock trades well above any reasonable valuation.

Earnings are expected to fall 12% this year, recover next year and allegedly grow at 10% thereafter. However, even giving the company a 25% premium for having cash and investments equal to debt and generating lots of free cash flow, I see no more than a 13x valuation, or $21 on this year’s earnings.

BMY trades at $53.

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