A slowing economy, a business that is too dependent on Europe, and valuations that are too high make United Parcel Service (
) the “Sell of the Week” from Charles Rotblut, editor of AAII journal, who noted that what Brown can do for you is mess up a portfolio.
Appearing on MoneyLife with Chuck Jaffe, MarketWatch senior columnist, Rotblut noted that the current price/book ratio on the stock is 9.49, well above the company’s five-year average of 7.87; if the stock were simply to revert back to the five-year average, Rotblut said investors would see a 17% decline on the stock.
Rotblut sees that kind of pullback, or worse.
“You look at the stock and realize it’s really too high, particularly for the environment we have now with all sorts of uncertainty,’ Rotblut said. “If you assume the economy is going to get better, UPS should do fine, but at the current valuation, some of that upside is already priced into the stock, versus if there is downside and we are looking at the economy slowing down, that is not priced into the stock.”
On Tuesday, Rotblut made Parker Hannifin
his “Buy of the Week.”
You can listen to the interview at www.moneylifeshow.com.
- Chuck Jaffe