Market Outlook: Stocks Look Fairly Valued

It's a good time to trade up to wide-moat companies.

Dave Sekera, CFA 22 July, 2021 | 4:28AM
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At a 4 per cent premium to our intrinsic valuations, the broad equity market in North America is at the high end of fairly valued. While many overvalued mega-cap stocks either fell or lagged the market, rising stock prices pulled up many previously undervalued stocks into fair value territory.

Some undervaluation remains, but in our North American coverage, less than 12 per cent of stocks have 4- or 5-star ratings. Since 2006, there have been only six months with as low a percentage of undervalued stocks. Based on the Morningstar Style Box, we recommend a portfolio weighted toward value stocks with exposure in growth focused in the large-cap category.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Alphabet Inc Class A2,712.60 USD0.58Rating
Amazon.com Inc3,366.24 USD1.04Rating
Facebook Inc Class A351.24 USD-0.20Rating

About Author

Dave Sekera, CFA  Dave Sekera, CFA, is a senior securities analyst with Morningstar.

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