Here are some stock picks from Morningstar in an overvalued market. Would these be great buys in a correction or market dip? Let's take a look:
HCP Inc. (NYSE:HCP) is a self-administered REIT that acquires, develops, leases, manages and sells healthcare real estate and provides financing to healthcare providers. HCP has a current dividend of 5%, which is great. HCP currently trades at 1.83 times its book value and about 28 times its free cash flow. One alarming figure is the $8 billion in long term debt, which is of course the financing used to acquire properties. Investors should wait to buy this stock, but it could be a bargain if a correction occurs.
- Warning! GuruFocus has detected 11 Warning Signs with HCP. Click here to check it out.
- HCP 15-Year Financial Data
- The intrinsic value of HCP
- Peter Lynch Chart of HCP
Enterprise Products Partners LP (NYSE:EPD) is an energy pipeline company that provides services to producers and consumers of natural gas, natural gas liquids, crude oil and certain petrochemicals. They pay a 3.5% dividend. EPD has little cash, a large amount of receivables, and high current liabilities and $17 billion in long-term debt. Priced at almost 5 times its book value, and almost 70 times its free cash flow, EPD is overvalued and probably won't be a bargain in a market correction.
Schlumberger NV (NYSE:SLB) supplies technology, integrated project management and information solutions to customers working in the oil and gas industry across the globe. SLB has a dividend of 1.3%. SLB is priced 3.5 times its book value and 21 times its free cash flow. SLB may be pulled back to fair value in a correction, but most likely won't be a bargain.