Susan Dziubinski: I’m Susan Dziubinski with Morningstar. Most everyone agrees that Warren Buffett is one of the greatest investors of all time. He has assembled a collection of solid businesses that make up Berkshire Hathaway’s BRK.A BRK.B portfolio.

Most of these Warren Buffett stocks look fairly valued according to Morningstar, but some of these stocks are overpriced. So today we’re looking at the three most overvalued stocks in Berkshire Hathaway’s portfolio as of mid-September. Even though Berkshire Hathaway holds them, Morningstar thinks investors should avoid these overpriced Warren Buffett stocks today.

3 Warren Buffett stocks to avoid today

  1. Jefferies Financial Group JEF
  2. Louisiana-Pacific LPX
  3. American Express AXP

The most overvalued stock in Berkshire Hathaway’s portfolio is Jefferies Financial Group JEF. Berkshire owns less than 1% of Jefferies stock, and Jefferies is one of the smallest positions in Berkshire’s portfolio. Jefferies is a full-service investment banking and capital markets firm. Morningstar doesn’t think the company has carved out an economic moat, due mainly to its focus on less profitable middle-market deals and smaller trading operations. We think the stock is worth $47, and it trades well above that.

The second Warren Buffett stock to avoid is Louisiana-Pacific LPX. Berkshire owns about 8% of the company’s shares, though the company is still a smaller position in Berkshire’s portfolio. Even though Louisiana-Pacific is one of the largest makers of wood products in North America, Morningstar doesn’t think the company has carved out an economic moat. Why? Well, the North American wood products market is competitive, and numerous players produce industry-standard products with little room for differentiation. We think this overpriced stock is worth $70.

The final Warren Buffett stock to avoid at today’s prices is American Express AXP. American Express is Berkshire’s second-largest holding, and Berkshire owns more than 20% of the company’s stock. Morningstar thinks American Express has carved out a wide economic moat with its closed-loop network that issues the credit card to the consumer, operates the payment network, and establishes a direct relationship with the merchant. We also think the company is in a strong financial position with a credit card portfolio that traditionally has less credit risk than its peers. But we think this wide moat company is overvalued today. We think the stock is worth $265 per share.

You’re able to find more of Morningstar’s stock ideas here.

Morningstar director Sean Dunlop and analysts Spencer Liberman and Michael Miller provided the research behind this segment.

Watch 4 Must-Own Dividend-Growth Stocks for more from Susan Dziubinski.