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Market Update

Our Take on 2001's Best-Performing Stocks

Many are selling above our fair value estimates.

In a tumultuous year for stocks, most equity investors had to cope with losses, rather than gains. But for those fortunate enough to own shares in a handful of security-software companies, online travel firms, and online florists, it was definitely a year to remember. (In fact, two stocks from this group, Office Depot (ODP) and Service Corp. International (SRV), were holdings in our Tortoise Portfolio, a model portfolio that appears in Morningstar StockInvestor.)

Now that these stocks have already had huge runups, we think more caution is warranted. Although companies such as McAffee.com  and 1-800-Flowers.com (FLWS) still have good prospects for growth, price risk is becoming much more of an issue; as the table below illustrates, many of these stocks are now selling above Morningstar's estimate of their fair value and therefore receive below-average star ratings. To find out more about our take on 2001's standouts, Premium Members can click on the Analyst Report links below.

 Top-Performing Stocks in 2001*
 

2001 Return
( % )

Morningstar
Rating
Morningstar
Fair Value
( $ )
McAfee.com  has good growth potential, but the stock is too pricey. Read the full  Analyst Report. 578.2 1 17
Network Associates  is clearly in better hands under new CEO George Samenuk. Read the full  Analyst Report. 517.2 1 17
FTD.com  has combined an efficient business model with good management decisions. Read the full  Analyst Report. 409.1 3 7
We think Priceline.com (PCLN) is one of the better choices among travel stocks. Read the full  Analyst Report. 343.3 3 6
We'd wait for Expedia's (EXPE) price to settle down before buying. Read the full  Analyst Report. 324.7 1 30

NVIDIA (NVDA) shares look ridiculously overvalued. Read the full  Analyst Report.

308.6 1 36
1-800-Flowers.com (FLWS) is one of the few e-commerce stocks worth watching. Read the full  Analyst Report. 278.2 1 12
Chico's FAS (CHS) still looks great to us. Read the full  Analyst Report. 185.3 3 43
Service Corp. International's (SRV) problems look grave. Read the full  Analyst Report. 185.1 3 4
We think Office Depot (ODP) looks fairly valued. Read the full  Analyst Report. 160.2 3 17
* Table includes the top-performing stocks in Morningstar's coverage universe.
Data is through 12-31-01.

Morningstar Analysts does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.