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Stock Strategist

Bargains Still Exist--Even in This Market

Here are three growth stocks that we think are attractively priced.

Mentioned: , , ,

Since we launched the Morningstar Rating for stocks in 2001, there have been three extended periods when we thought stocks in general were bargains: immediately after 9/11, the period from the spring of 2002 to the spring of 2003, and, most recently, the middle months of 2006.

This third period was the least extreme of the bunch--the median stock we cover was 4% undervalued in July, which is hardly something to get excited about--and it appears to have come to a close. The median price/fair-value ratio of our coverage universe now stands at 1.03, meaning that the median stock we cover is 3% overvalued, in our view. The number of stocks with 5-star ratings--our highest rating--has dropped to less than 100, which is only 5% of our coverage universe.

Haywood Kelly, CFA has a position in the following securities mentioned above: EBAY, WU. Find out about Morningstar’s editorial policies.