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Commentary

Avoid These Four Highflying Stocks

Stocks as a whole aren't outrageously expensive even after the recent runup, but these names have fallen firmly into the overvalued category.

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Stocks have started off 2012 with a bit of a bang. The broad-market Morningstar U.S. Market Index is up 4.8%. A big driver for this increase could be that a lot of the bad news that seemed to dominate the headlines in 2011 has been in short supply so far in 2012. Economic data keeps pointing to a continued, if slow, expansion in the United States while emerging markets are still growing at a fairly impressive clip.

And in Europe, the market seems to be taking no news as good news. The European Central Bank's plan to funnel money into struggling banks to keep them afloat seems to be working. Furthermore, the restored confidence in banks has helped bring down yields on sovereign bonds across the eurozone. Even Standard & Poor's downgrade of a slew of nations last week didn't do much to shake the market.

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