An American Airlines plane takes off near the US Capitol before landing at Reagan National Airport in Arlington, Virginia, on January 24, 2022.
Joshua Roberts | Reuters
Going by historical valuations, there may still be a few more stocks in the market to sell.
A rough year for Wall Street turned worse on Monday, as stocks opened sharply lower and the S&P 500 set a new intraday low for the year. Sales were extensive, with Each member of the benchmark index falling in morning tradingBut some stocks seem more expensive than others.
Despite widespread declines, many stocks are still trading above their historical averages, as measured by their price-to-earnings ratios. For example, the stocks below are trading above their 5-year average P/E ratios despite falling more than 15% this year.
Valuable Stocks Based on Average P/E
| anchor | company | Forward P/E | Average Forward P/E | P/E difference | YTD % |
|---|---|---|---|---|---|
| came | American Airlines | 32.9 | 11.1 | 197.6% | -18.1 |
| ftnt | fortinet | 51.7 | 44.3 | 16.6% | -19.8 |
| kim | Kimco Realty | 33.5 | 29.5 | 13.6% | -16.2 |
| SNPS | Synopsys | 32.7 | 29.8 | 9.6% | -17.1 |
| BIIB | biogen | 12.6 | 11.5 | 9.0% | -17.7 |
| cdns | Cadence Design Systems | 35.9 | 33.7 | 6.7% | -20.0 |
| dd | dupont de nemours | 17.2 | 16.3 | 5.6% | -21.4 |
| msi | Motorola Solutions | 20.1 | 19.2 | 4.6% | -23.0 |
| AAPL | Apple | 21.3 | 20.7 | 2.6% | -22.8 |
| Ni | NextEra Energy | 26.0 | 25.4 | 2.6% | -18.7 |
| AWK | American Water Works | 32.1 | 31.3 | 2.4% | -21.5 |
| WBD | Warner Bros. Discovery | 9.2 | 9.0 | 2.4% | -36.9 |
| Fast | Tie | 26.6 | 26.0 | 2.3% | -18.9 |
| cost | Costco Wholesale | 32.9 | 32.3 | 1.8% | -18.4 |
| SHW | Sherwin-Williams | 24.4 | 24.0 | 1.4% | -29.7 |
Source: factset
Source: FactSet
The biggest outlier on the list is American Airlines, The Covid era has seen a dramatic change in estimated earnings in travel stocks, including airlines, which can make the average P/E a noisy number. Still, American traded at nearly 9-times-earnings in mid-2017, long before the pandemic, and down from the roughly 33 it was trading at Friday’s close.
The stock is trading at the second highest valuation relative to its own history. fortinet, Cyber Security stock is trading at a P/E of around 52. Data security is seen as the growth area of the future, but investors are increasingly turning their backs on companies whose big payoffs are years away.
Biggest name on the list AppleHowever, it was trading only slightly above its average valuation. The iPhone and iPad maker has a massive stash of cash that many investors see as a relatively safe stock in a growth-focused sector, but its shares are still down more than 20% year over year.
retail seller costco Despite concerns about consumer spending and inflation, trading at slightly higher than normal valuations. Costco’s subscription model may make it more attractive to investors than its retail peers during uncertain times, but a recession could drag the entire sector down.
Making matters worse, the price-to-earnings values shown above may still be too optimistic. As signs of an economic slowdown mount in recent weeks, some Wall Street strategists have predicted that analysts will soon be forced to cut their earnings forecasts. This would make these stocks even more expensive on a historical basis.
