Don't Buy These Excellent Companies

I don't read too many articles telling us the stocks we should avoid, so here it is.  I created a watch list of great dividend stocks back in 2012, and have been adding to it since.  There are some GREAT companies on this list that I'd love to own, but they are TOO expensive.  Buying stocks when they are undervalued works - so the converse of this must also work.  Sell these stocks when they are grossly overvalued, or short them, but for heavens sake, don't buy them!  My entire watch list is overpriced, some more than others.  For your information, here is my current watch list:

Symbol	Name
MMM	3M COMPANY
ADP	AUTOMATIC DATA PROCCESSING INC
BLL	BALL CORP
BDX	BECTON DICKINSON AND COMPANY
CHD	CHURCH AND DWIGHT CO INC
CLX	CLOROX CO
CL	COLGATE PALMOLIVE CO
COST	COSTCO WHOLESALE CORP
CMI	CUMMINS INC
D	DOMINION RESOURCES INC
GIS	GENERAL MILLS INC
HD	HOME DEPOT INC
HRL	HORMEL FOODS CORPORATION
SJM	JM SMUCKER COMPANY
MA	MASTERCARD INCORPORATED
MKC	MCCORMICK AND CO
MCK	MCKESSON CORP
NKE	NIKE INC
PEP	PEPSICO  INC
PX	PRAXAIR INC
PG	PROCTER AND GAMBLE CO
ROST	ROSS STORES INC
SO	SOUTHERN CO
SYK	STRYKER CORP
SYY	SYSCO CORP
UTX	UNITED TECHNOLOGIES CORPORATION
DIS	WALT DISNEY CO
WM	WASTE MANAGEMENT
YUM	YUM BRANDS INC

I've been watching these stocks for a couple of years, waiting.  I have buy prices set for all of them, well below where they trade today.  That said, I wouldn't buy any of these today, and if I owned any of them, I'd definitely trim them down to a 2/3 position in the portfolio.  Here are a couple of examples:

P&G:  This chart shows the PE ratio over the past 15 years.  It's nearing its six year high point today.  Time to sell.

Costco:  The PE today is getting close to 25.  It's only been higher in the past 15 years in 2001.  Sell, sell, sell.

Colgate Palmolive:  The PE now reaching levels not seen since 2001.  Great company, time to sell.

In summary, I can take a pretty dispassionate view of these stocks because I don't own them.  I'm just watching (that sounds weird).  I haven't fallen "in love" with these names like many do after owning them over long periods.  For example, I have a strong affection for Walgreens because its up over 85% since I bought it, but it too is getting into sell territory, and in fact, I've trimmed it back to a full position in the portfolio.

If you own any of the stocks on the watch list above, take a close look at their current valuation, and consider trimming them down.  Use the proceed to buy something cheaper!

Chump