Finding value in an overpriced market

The markets have been on a tear since the presidential election in November, and the Dow Jones recently hit a new high and broke through the psychological 22,000 barrier for the first time.

While investors have enjoyed big gains in recent months, stocks are starting to look a bit pricey. Consider that the forward price-to-earnings ratio of the S&P 500 sits at 17. This figure is 14% higher than the average P/E, which suggests that the market may have topped out, and many stocks are trading in overbought territory.

The dilemma that investors face at this time is that even though the market may be overbought, the options are limited are where to turn. Corporate bonds have their lowest yields in the last six decades, and the U.S. 30 Year Treasury Bond is currently yielding just 2.914%.

With the markets as hot as they have been, and yields in fixed income assets being as low as they are, you want to keep your money at work in stocks at this time, but you have to make sure that you are getting the best value for your investments.

To find good values in the market, you need to look for stocks with attractive P/E ratios, favorable forward earnings growth estimates, and ideally a nice dividend yield to compliment the investment.

Let’s take a look at five stocks that appear to offer good value in this overpriced market.

Michael Fowlkes

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.

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