Today's Wall Street Journal has an article about the cost-cutting measures going on retailer, JC Penney (NYSE: JCP). The article, essentially an interview with CEO and Chairman, Myron "Mike" Ullman III, details Ullman's changing of gears, from aggressive store expansion and online growth to scaling back in the face of a looming recession.

The CEO is expected to announce today plans to merge the buying and marketing operations for store and online sales, cutting as many as 200 jobs.

In the article, Ullman says he may scale back store expansion over the next two years.

Getting more of the consumer's wallet

Ullman says, "Half of the families in the U.S. shopped with us at least once last year. But we only get 7% of their spending. So, our biggest opportunity in the downturn is to make every visit they make to our store, Internet or catalog more productive by offering more innovation."

Sears Holdings' (NASDAQ: SHLD) second quarter report, issued today, reflects a slump in both the domestic Sears and K-Mart store sales. Net income dropped from $294 million to $176 million, and diluted EPS fells from $1.88 to $1.17. The shortfall didn't catch analysts by surprise, though; those polled by Thompson had been expecting $1.132.

U.S. Sears stores suffered a drop-off in sales of 4.3% for the quarter and 3.9% for the first half, while K-Mart declined a 3.8% for the quarter, 4.1% for the half. The lone strong performer was Sears Canada, where sales grew by 3.4%.

The company reported that K-Mart's most troublesome product areas were lawn and garden, home, and health and beauty products, while women's apparel performed slightly better than expected. Sears Domestic took a hit in home appliance sales, especially weather-related items such as air conditioners, while electronics and apparel sold fairly well.

Sears also purchased almost 10 million shares of its stock at an average price of $153.66 in this quarter. The stock has since dropped to the $140 neighborhood, down today in early trading.

Bloggers including our own Julie Tilsner have made no secret of their distaste for the Sears customer experience, and I feel the same way about the increasingly tawdry K-Mart chain. Comparing Sears' recent performance to competitors such as J.C. Penny (NYSE: JCP) and Target (NYSE: TGT), our opinion seems to be shared by many shoppers.

I recently took a broad, comprehensive look at companies with market caps over $1 billion. My review included analyzing future cash flow, price-to-sales ratios, earnings forecasts and stock appreciation over the last five years.

Based on these measures, I've identified fifteen large cap companies that I think are the most overvalued in terms of their current stock prices. Below is the list, including links for more detailed analysis:

JC Penney (NYSE:JCP). The stock of this iconic American discounter has nearly doubled in the past two years. But sales remain mediocre and lately the stock has started to waffle.

Schlumberger Limited (NYSE:SLB). Its stock is up 200% over the past five years while customer ExxonMobil Corporation (NYSE: XOM) is up only 100%. It has done very well, but it is in a cyclical industry that is pegged to oil prices and it' run may not last forever.

Merck & Co (NYSE:MRK). This once down-trodden name now trades near its 52-week high. But the drugs that represent 50% of its revenues go "off patent" soon. And Merck still faces major Vioxx liabilities.

AT&T (NYSE:T). This stock is at a four-year high at the same time that the competitive threat from cable only grows more fierce. Consumers are getting used to the idea of buying phone service from their cable companies and suddenly VoIP isn't so scary anymore. That spells trouble for AT&T.