Sponsored By:

5 Overpriced Stocks to Ditch Now

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

      View All  

Bristol-Myers Squibb

bristol 185 5 Overpriced Stocks to Ditch Now

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.


Article printed from InvestorPlace Media, http://investorplace.com/2013/11/5-overpriced-stocks-to-sell/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.