3 Overvalued US Stocks to Sell

Morningstar's chief US market strategist, Dave Sekera, identifies Delta Air Lines (DAL) as an overvalued stock to sell in November. While Delta currently boasts the highest revenue yield in the North American market and a significant share of industry profits, its reliance on affluent consumers' travel demand makes it vulnerable. Morningstar anticipates a return to normalized operating conditions, where increased price competition will erode airline profitability.

The analyst believes the market's current valuation of Delta stock significantly exceeds its fair value estimate of $32. This overvaluation stems from the expectation that current high demand and profitability will continue indefinitely. However, the long-term outlook suggests a more competitive landscape that will pressure Delta's margins.

Investors should consider the potential for decreased profitability as the airline industry normalizes. The current stock price may not reflect the challenges Delta will face in maintaining its market position and profitability in the long run. The recommendation to sell is based on the belief that the market has priced in overly optimistic expectations for Delta's future performance.