3 Undervalued US Stocks

THE VALUE INVESTOR: After five years of steady growth is the US stock market beginning to come off the boil? We identify three companies that are considered undervalued

Karen Kwok 22 January, 2016 | 8:22AM
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US small stocks have now entered a bear market; the Russell 2000 index has lost 20% of its value to return to levels last seen in July 2013. And it is not just the small caps which look wobbly. Fourth-quarter earnings for S&P 500 companies are expected to fall more than 5%, versus expectations of a 0.6% decline at the start of the quarter. This would be the first time since 2009 that earnings have contracted for three consecutive quarters. Higher volatility will likely continue.

In a market sell-off it can be difficult to identify which share prices have fallen with reason and which have been dragged down by contagion.

Morningstar’s rating for stocks can help investors uncover stocks that are truly undervalued, cutting through the market noise. The rating is determined by three factors, which are a stock’s current price, Morningstar’s estimates of the stock’s fair value, and the uncertainty rating of the fair value.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Cabot Oil & Gas Corp20.40 USD0.29Rating
Gap Inc23.15 USD4.56Rating
Visa Inc Class A230.65 USD-0.15Rating

About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk