2 Overvalued Stocks

The Motley Fool's "MarketFoolery" takes on two well-known brands and explains why they're overvalued.

Jun 9, 2014 at 5:00PM

On Monday's edition of MarketFoolery, host Chris Hill, Motley Fool One analyst Jason Moser, and Stock Advisor Canada analyst Taylor Muckerman discuss two overvalued stocks. With the stock market where it is, Chris believes that it's a great time to discuss overvalued stocks, and Jason and Taylor both heartily agree. 

Jason pulls out Zillow (NASDAQ:ZG) as his overvalued stock, explaining that the company is a good one but with a bad price. After mentioning that Zillow has worked at building out its identity to line up with its mission, he notes that the company is operating at a loss, and Jason believes that there are a lot of assumptions built into the stock's price. He discusses a potential problem in Zillow's future, the rental market that it could fill out, and what to do with Zillow if you already have it in your portfolio.

Krispy Kreme (NYSE:KKD) is Taylor's overvalued stock -- he might be celebrating National Doughnut Day a bit late this year with his pick. Despite bad earnings in December and a hit last week, Taylor says that Krispy Kreme's margins are improving. However, its partnership with Wal-Mart is giving Taylor pause. Chris notes that the doughnut company has about two-thirds of its stores outside of the United States and he wonders why Krispy Kreme isn't moving along the domestic lines of Dunkin' Brands (NASDAQ:DNKN). While Taylor likes the company, he thinks it needs to pull back a bit.

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Chris HillJason Moser, and Taylor Muckerman have no position in any stocks mentioned. The Motley Fool recommends and owns shares of Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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