After a weak stretch towards the first part of August, the market found its footing and is once again charging to new highs. As the market has moved higher, so have a lot of big name stocks, some of which are currently looking slightly overbought and could be ready for a correction.
The one thing no one wants to do in markets such as the current bull market is to make rash decisions and sell winners which still have more upside potential. Unfortunately, there is no easy way to differentiate between stocks that have run out of steam and stocks that still have room to run.
In an attempt to identify stocks that could be close to correcting, we will look at a couple of different factors. We will start by screening for stocks with unusually high P/E ratios. We will look for companies whose ratios are higher than those of their peers. The next step will be to look at the stocks from a technical point of view and try to deduce whether or not the stock has additional upside potential.
The following stocks have all enjoyed strong runs, resulting in big gains for shareholders. Each is now looking risky at its current level, and investors may want to consider locking in some profits and getting out before the stock heads lower.