After a year of solid outperformance, it may be time to hit the sell button on these three S&P/ASX 200 Index (ASX: XJO) giants.
That's according to Family Financial Solutions' Jabin Hallihan and Alto Capital's Tony Locantro, who believe the companies' outperformance over the past months leaves them in overvalued territory (courtesy of The Bull).
The ASX 200 giants facing the analysts' knife are National Australia Bank Ltd (ASX: NAB), which has a market cap of just under $135 billion; Wesfarmers Ltd (ASX: WES), which commands a market cap of $99 billion; and Northern Star Resources Ltd (ASX: NST), with a market cap of just over $40 billion.
Atop of the dividends all three companies pay, NAB shares have gained 8.5% over the past 12 months; Wesfarmers shares are up 14.9%; and Northern Star shares have rocketed 57.8%.
Now, here's why it may be time to take profits.
Image source: Getty Images
ASX 200 giants on the chopping block
"NAB is Australia's largest business bank, benefiting from an oligopolistic market structure," Family Financial Solutions' Hallihan noted.
Commenting on his sell recommendation on this ASX 200 giant, Hallihan said:
Statutory net profit of $6.759 billion in full year 2025 was down 2.9% on the prior corresponding period. A credit impairment charge of $833 million was up from $728 million in the previous year.
In our view, the shares are materially overvalued and leave little margin for error. Capital is better redeployed into discounted quality.
Hallihan also has a sell recommendation on Wesfarmers shares.
"This industrial conglomerate owns high quality businesses, such as Bunnings and Kmart Group," he said.
"The company is diversified, with other businesses including Officeworks, Wesfarmers Chemicals, Energy and Fertilisers and industrial safety," he added. "Diversification is a benefit as it spreads risk."
But Hallihan is also concerned over this ASX 200 giant's current valuation. He concluded:
However, in our view, the stock remains significantly overvalued, with optimism already priced in. The stock was recently trading on a lofty price/earnings ratio above 32 times, so it's exposed to a correction on signs of any weakness.
We would be inclined to trim holdings and re-invest the proceeds in stocks offering better value.
Also tipped as a sell
Alto Capital's Tony Locantro noted, "Northern Star's share price has performed strongly, supported by higher gold prices and improved sentiment towards large market capitalisation producers."
But with the ASX 200 giant running into some recent operational headwinds, Locantro concluded:
However, the company's most recent production report disappointed, with output and cost guidance undershooting market expectations. While the longer-term outlook for gold remains positive, recent operational softness tempers near term confidence.
With much of the upside already reflected in the share price, the risk-reward balance favours taking profits at current levels.
