While I believe the equity markets are generally overvalued at this time, there are always companies who are undervalued. In essence, just because most companies are overvalued doesn't mean that everything is overvalued.
Take Advance Automotive (AAP). Recently, the stock moved down into the low 110 range. It hasn't been that low generally for the last five years and it was on the low side of its price range for the last five years. Their P/E was very reasonable with a strong dividend yield. They have spent the last several years integrating a huge acquisition, General Parts International. The acquisition, like most acquisitions, took way longer than management had expected. I view acquisitions like projects around my house. If I think it will take 1 day, it will take 3 days!
What gives? The market may be fearful of Amazon, but when your car breaks down and you need a part, not many people want to wait even overnight. Their CEO is retiring. He oversaw much of the significant integration required when they bought out General Parts International.
To keep "my eyes peeled" for undervalued securities, I spend a lot of time analyzing the equities I own. I review them financially every quarter. I do this to ferret out any changes the market fails to recognize. This financial review gives me insights that most people don't bother to do. That, in my view, is an advantage to "finding a needle in a haystack" in an otherwise market of overvalued securities. But, building a model, updating it and reviewing it takes time. There is no free lunch. Then, I almost daily review the price action of my holdings and weigh that against their financial model.
So, keep "your eyes peeled" for those undervalued situations in this current market. Eventually, when the sh_t hits the fan, they'll be tons of undervalued securities all over the place, but we are not anywhere near that now. When that happens, almost NO one will want to own stocks. The "gold" will hardly need to be mined. It will be all over the place in plain sight, but many people will have been burned so badly that they will not want to touch it.
The stock market is the only market I know that most people want to buy more when the price goes up and don't want to buy any when there is a clearance sale. Don't fall into that mental trap!
Be smart, be well-read, be aware and be successful.
"Price is what you pay, value is what you get."
-Warren Buffett
