US Videos

Stock Market Fairly Valued After 2019 Rebound

Morningstar.com

After the strong stock market rebound in January, we thought we'd look at how valuations have changed since the start of the year.

Our market fair value shows how big of a gap, on average, we see between market prices and our estimate of intrinsic value across the entire market or a specific sector.

The current ratio for all rated stocks is 0.96. This indicates that the market is about 4% undervalued today. At the start of 2019, the ratio was 0.88. So we think the market is more expensive than it was just a month ago.

There isn't a significant gap in average valuations by sector. The real estate, healthcare, and utilities sectors are slightly overvalued. Strong performance means that the basic materials and real estate sectors saw the largest increase in average valuation.

The least expensive sector is energy, which is about 13% undervalued by our estimates. Some of our analysts' favorite names here include Enbridge, Enterprise Products Partners, and Schlumberger.