WHAT IS Fully Valued

A fully valued stock is a stock whose price analysts believe reflects the market's recognition of the company's underlying fundamental earnings power and therefore is unlikely to rise further in price. If the stock goes up from that price, it is called overvalued. If the stock goes down, it is termed undervalued.


Fully valued stock belongs to companies that have disciplined plans for achieving dramatic long-term growth in both profits and revenues. Such companies must also have inherent qualities that make it difficult for new entrants into that business to share in such growth. Thus, investors who believe they are holding fully valued stock should hold it until either there has been a fundamental change in the company's nature or it has grown to a point where it will no longer be growing at a faster rate than the economy as a whole.

Experts can value a stock differently, so a stock that is considered fully valued by one may not be perceived as being fully valued by another. Generally, a fundamental analysis of the underlying company precedes a determination of whether or not a stock is fully valued. While a fully valued stock is less likely to experience significant appreciation in value, some investors may be willing to invest in fully valued stocks for their stability as well as any dividends they might pay.

A fully valued stock can be contrasted with an overvalued stock and an undervalued stock. An undervalued stock is one that is selling at a price significantly below what is assumed to be its intrinsic value, and conversely, an overvalued stock has a current price that is not justified by its earnings outlook or price-earnings (P/E) ratio and whose price, therefore, is expected to drop.

Examples of Fully Valued

Financial news reports on experts' assessments of fully valued stocks and markets.

In October 2017, TheStreet.com reported that John "Jack" Bogle, founder of the Vanguard Group, said that the market seems to be "fully valued." Bogle, interviewed by TheStreet.com, said that "valuations of stocks are, by my standards, rather high." Similarly, CNBC reported in December 2017 that billionaire hedge-fund pioneer Leon Cooperman said that the stock market is not overvalued yet. Instead, the chairman and CEO of Omega Advisors characterized it as "reasonably fully valued."

Luke Lango of InvestorPlace.com wrote in March 2018 that, above the $65 level, Nike stock looked fully valued, "considering relatively muted top-line growth prospects and ongoing margin compression concerns."