I performed some due diligence for expensive large-cap stocks (as measured by their forward price-to-earnings ratio) . The constraints I used for this filter are:
- A market capitalization of at least $10 billion. I figure that the larger the company the more liquid it is; liquid stocks often become rather volatile when the market decides that they have been over-bought.
- A minimum trailing price-to-earnings ratio over 40.
- A minimum forward price-to-earnings ratio over 30. I’m looking for stocks which, while still expensive by any reasonable measure, have become less so over the past quarter. This suggests either that the growth in the company’s earnings have increased at a faster rate than its stock price or that the stock price has declined. Either way, this is something to take into consideration when looking at overvalued stocks.
- A minimum debt-to-equity ratio of 1. Companies that service a lot of debt may not have sufficient cash flows to invest in the business, and so their stock price may fall due to poor growth prospects.
Following is a quick summary of these 7 companies.
- Aluminum Corporation of China Limited (NYSE:ACH): About the company: Aluminum Corporation of China Limited, also known as Chalco, is a producer of alumina and primary aluminum in China. The Company refines bauxite into alumina and smelts aluminato to produce primary aluminum. Competitors of Aluminum Corporation of China Limited include: Alcoa Inc (NYSE:AA), Alumina Limited(NYSE:AWC), and Noranda Aluminum Holdings (NYSE:NOR).
- American Tower Corp. (NYSE:AMT): About the company: American Tower Corporation owns, operates, and develops wireless communications and broadcast towers in the United States. The Company leases antennae sites on multi-tenant towers for a diverse range of wireless communications industries, including personal communications services, paging, and cellular. American Tower also offer a variety of network development services. Competitors of American Tower Corp. include: Crown Castle International Corp. (NYSE:CCI), SBA Communications Corp. (NASDAQ:SBAC), Syniverse Holdings, Inc. (NYSE:SVR), AT&T Inc. (NYSE:T),Neustar, Inc. (NYSE:NSR), WPCS International, Inc. (NASDAQ:WPCS), Telephone & Data Systems(NYSE:TDS), Sprint Nextel Corporation (NYSE:S), and Verizon Communications (NYSE:VZ).
- Avalonbay Communities, Inc. (NYSE:AVB): About the company: AvalonBay Communities, Inc. is a self-managed, fully-integrated multi-family real estate investment trust. The Company focused on the ownership and operation of institutional-quality apartment communities in high barrier-to-entry markets of the United States. The markets are located in Northern and Southern California and in the Mid-Atlantic, Northeast, Midwest and Pacific Northwest regions. Competitors of Avalonbay Communities, Inc. include: UDR, Inc. (NYSE:UDR), Equity Residential(NYSE:EQR), Apartment Investment Corp. (NYSE:AIV), Mid-America Apartments (NYSE:MAA), Essex Property Trust (NYSE:ESS), Post Properties, Inc. (NYSE:PPS), BRE Properties, Inc. (NYSE:BRE), Camden Property Trust (NYSE:CPT), Colonial Properties Trust (NYSE:CLP), and Home Properties, Inc.(NYSE:HME).
- Boston Properties, Inc. (NYSE:BXP): About the company: Boston Properties, Inc. is a real estate investment trust. The trust owns, manages, and develops office properties in the United States, with a significant presence in Boston, Washington, DC, Midtown Manhattan and San Francisco. Competitors of Boston Properties, Inc. include: Parkway Properties, Inc. (NYSE:PKY), Kite Realty Group Trust (NYSE:KRG), Vornado Realty Trust (NYSE:VNO), SL Green Realty Corp. (NYSE:SLG), Mack-Cali Realty Corp. (NYSE:CLI), Highwoods Properties (NYSE:HIW), Cousins Properties, Inc. (NYSE:CUZ),Brandywine Realty Trust (NYSE:BDN), and Government Properties (NYSE:GOV).
- Kinder Morgan Energy Partenrs LP (NYSE:KMP): About the company: Kinder Morgan Energy Partners, LP, is a pipeline transportation and energy storage company. The Company operates pipelines and terminals. The pipelines transport natural gas, gasoline, crude oil, carbon dioxide and other products; and its terminals store petroleum products and chemicals, and handle bulk materials like coal and petroleum coke. Competitors of Kinder Morgan Energy Partners LP include: Kinder Morgan Inc. (KMI), Copano Energy LLC (NASDAQ:CPNO), Enterprise Products Partners (NYSE:EPD), MarkWest Energy Partners(NYSE:MWE), El Paso Pipeline Partners (NYSE:EPB), El Paso Corporation (NYSE:EP), Enterprise GP Holdings LP (EPE), Energy Transfer Partners (NYSE:ETP), Duncan Energy Partners (NYSE:DEP), andMagellan Midstream Partners (NYSE:MMP).
- Simon Property Group Inc. (NYSE:SPG): About the company: Simon Property Group, Inc. is a self-administered and self-managed, real estate investment trust. The Company owns, develops and manages retail real estate properties, including regional malls, outlet centers, community/lifestyle centers, and international properties. Competitors of Simon Property Group Inc. include: General Growth Properties (NYSE:GGP), CBL & Associates Property (NYSE:CBL), Developers Diversified (NYSE:DDR), Kite Realty Group Trust(NYSE:KRG), Saul Centers, Inc. (NYSE:BFS), One Liberty Properties (NYSE:OLP), Ramco-Gernshenson Properties (NYSE:RPT), The Macerich Company (NYSE:MAC), and Roberts Realty Investors (AMEX:RPI).
- Wynn Resorts Ltd. (NASDAQ:WYNN): Wynn Resorts Limited owns and operates luxury hotels and destination casino resorts in Las Vegas, Nevada and in Macau, China. The resorts feature guest rooms and suites, restaurants, gold courses, and on-site luxury automotive dealerships. Competitors of Wynn Resorts Ltd. include: Las Vegas Sands Corp. (NYSE:LVS), Pinnacle Entertainment(NYSE:PNK), MGM Resorts International (NYSE:MGM), Melco Crown Entertainment (NASDAQ:MPEL),Boyd Gaming Corporation (NYSE:BYD), and Century Casinos, Inc. (NASDAQ:CNTY).