Sometimes good companies aren’t good buys, and this is not always a bad thing. Often it is a result of the market over reacting in a positive direction. The stocks simply become overvalued, but their underlying fundamentals remain excellent. Below are a couple of companies that fall into this group:

Illinois Tool Works Inc. (NYSE: ) – Yield: 3.06% – 2 Stars – Analysis
Illinois ToolWorks Inc. is a diversified manufacturer operates a portfolio of about 750 industrial and consumer businesses located throughout the world. As you can see for the information below, price is all that is keeping ITW from being a 4 Star stock:

• Recent Price: $40.00
• 3 Star Price: $38.99
• 4 Star Price: $36.20

3M Co (NYSE: ) – Yield: 2.89% – 2 Stars – Analysis
3M Co. is a diversified technology company with a presence in various businesses, including industrial & transportation, healthcare, display & graphics, consumer & office, safety, security & protection services, and electro and communications. Like ITW above, price is all that is keeping MMM from being a 4 Star stock:

• Recent Price: $72.00
• 3 Star Price: $57.44
• 4 Star Price: $44.43

I was fortunate to purchase both of the stocks above when their prices were much lower, so I can’t complain that they are no longer 4 Star buys. However, for other companies the road to fewer stars is not as appealing. Instead of a significant run up in their share price, the run up may have occurred in their debt or dividend payout percentage, or both. Here are some dividend companies and the challenges they are facing:

BP Plc (NYSE: ) – Yield: 4.67% – 1 Star
This supermajor integrated oil company (formerly BP Amoco p.l.c.) is based in London and is the world’s second largest publicly owned oil company and the fourth largest U.S. refiner.