Stock Market Outlook: Global Equities Are Starting to Look Attractive
Energy, particularly midstream and refining, is the most attractive sector. Technology has also become compelling.
Amid political turmoil around the world, the Morningstar Global Markets Index dropped 14% in the fourth quarter to Dec. 20, leaving the broad measure 10% below where it had started 2018.
From a bottom-up perspective, global equities are beginning to look attractive. The median stock across our 1,500-plus coverage trades at a 14% discount to our estimate of fair value. Entering the fourth quarter, we had pegged the typical stock as fairly valued. Not surprisingly, we also see more strong buying opportunities, with 6% of our coverage trading at 5 stars, up from 2% a few months ago.
Basic Materials: Fewer Buying Opportunities Than in Most Sectors
Communication Services: Attractive, Sustainable Yields on Offer
Consumer Cyclical: Firms That Blur the Lines of Digital and Physical Are Set to Excel
Consumer Defensive: Meaningful Opportunity in Tobacco
Energy: A Drop in Oil Prices Has Made Energy Stocks More Attractive
Financial Services: Value in Banking and Asset Management Firms
Healthcare: Specter of ACA Repeal Hangs Over Fairly Valued Sector
Industrials: Trade Tensions Lead to Attractive Valuations
Real Estate: Only a Few Opportunities in Fairly-Valued Sector
Technology: Semiconductor, Software Firms On Sale
Utilities: Investors Once Again Treating U.S. Utilities as a Safe Haven