US Stocks: Opportunities in an Overvalued Market

Morningstar equity analysts highlight the US companies trading at less than fair value and find the stock market as a whole is 3% over-priced

Morningstar Equity Analysts 12 May, 2017 | 9:38AM

The market currently trades slightly above fair value, from our perspective, with the market-capitalization-weighted average, uncertainty-adjusted price/air value ratio for stocks in the S&P 500 Index that are under active Morningstar research coverage at 103% as of April 28, which is unchanged from last month’s ratio.

The S&P 500 improved 0.9% in April, closing at 2,384.19 at the end of the month. Each of the 11 sectors trade at fair value, on an uncertainty-adjusted price/fair value basis. The utilities sector was the most highly valued, trading at over 109% of fair value. Much like the prior month, the real estate sector held the cheapest valuation, trading below 98% of fair value.

Among the stocks trading at less than fair value, are those in the healthcare, financial and consumer discretionary sectors. Technology stocks and energy stocks look fully valued on a sector basis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Bed Bath & Beyond Inc25.36 USD0.75
General Motors Co36.83 USD-1.55

About Author

Morningstar Equity Analysts  Morningstar stock and fund analysts cover 2,000 mutual funds, 2,100 equities, and 300 exchange-traded funds.

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