5 Overvalued Stocks to Watch

1. McCormick & Company, Incorporated (NYSE:MKC)

Number of Hedge Fund Holders: 33

P/E Ratio as of September 19: 31.18

McCormick & Company, Incorporated (NYSE:MKC) is an American food company that manufactures and sells spices, seasoning mixes, and condiments. The stock dropped 5.9% on September 14 after the firm slashed its 2022 guidance and reported preliminary Q3 results that fell short of Wall Street expectations, driven by macro headwinds that weigh on performance. These include moderation of consumption trends, supply chain challenges, divestiture of the Kitchen Basics segment, and unfavorable currency movement. With a price-to-earnings multiple of 31.18 as of September 19, McCormick & Company, Incorporated (NYSE:MKC) is an overvalued stock. 

Barclays analyst Andrew Lazar on September 12 slashed the price target on McCormick & Company, Incorporated (NYSE:MKC) to $82 from $94 and assigned an Equal Weight rating to the shares. The company preannounced lower than anticipated Q3 sales and earnings and cut its full year guidance on both metrics, the analyst told investors in a research note.

According to Insider Monkey’s data, McCormick & Company, Incorporated (NYSE:MKC) was part of 33 hedge fund portfolios at the end of Q2 2022, compared to 34 funds in the preceding quarter. Terry Smith’s Fundsmith LLP is the leading position holder in the company, with approximately 15.5 million shares worth $1.3 billion. 

Here is what ClearBridge Sustainability Leaders Strategy has to say about McCormick & Company, Incorporated (NYSE:MKC) in its Q3 2021 investor letter:

“Within consumer staples, we sold out of Unilever, a great company and sustainability leader that we believe faces margin headwinds as it invests to promote growth, and replaced it with McCormick, a leader in food seasonings and flavors. McCormick is a high-quality business that has lagged recently due to the negative COVID-19 impacts on the business, which provided us with an attractive entry point. The company is also levered to the healthy eating trend, as seasonings are a healthier substitute for sugar and fat.”

You can also take a look at 10 Monthly Dividend Stocks with Highest Yields and 10 Best LNG Stocks To Buy. 

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