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Stock Strategist

Our Outlook for the Market

Our sector-by-sector take on the big themes and the best bargains.

With 100 equity analysts covering 130 industries, Morningstar has an opinion on just about every corner of the market. As Premium Members know, our coverage list has expanded to more than 1,900 stocks from less than 500 over the past five years. With that expanded coverage, we've become increasingly able to use our bottom-up analysis of individual stocks to draw conclusions about specific industries, broad sectors, and even the market as a whole. You can see this clearly in our market-valuation graph, as well as the two new portfolios in our monthly ETFInvestor newsletter--portfolios that use our stock research to help pick ETFs. 

The Market
So, where do we stand heading into the second quarter? The median stock in our coverage universe is about 4% overvalued, in our opinion. Not too hot. Not too cold. For some historical perspective, the highest the median stock has ever gotten was 14% overvalued, back in December 2004. The lowest: 22% undervalued in October 2002. At current levels, we'd expect the typical stock to offer positive--but single-digit--returns to long-term investors.