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5 Stocks to Spend Your Stimulus Check On

These familiar brands are all undervalued today.

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Congress just approved a third round of stimulus, which will send another $1,400 to the bank accounts of many Americans later this month. What will we be spending those dollars on? Stocks, apparently. A new report from Deutsche Bank finds that half of 25- to 34-year-olds surveyed plan to invest 50% of their stimulus checks in the stock market. Other age groups were looking to put money to work in stocks, too--albeit at a lesser rate.

Given how well stocks have performed lately, where can you find opportunities that don't carry a lot of price risk and have room to run?

First, focus on the stocks of high-quality companies. Such companies are financially healthy and able to fend off competition. You can find high quality companies by focusing on those that've carved out wide or narrow economic moats. (Learn more about the Morningstar Economic Moat Rating.)

Then, buy those stocks when they're trading below what they're worth. Morningstar estimates a fair value for stocks, based on how much cash we think a company will generate in the future. We suggest buying stocks when they trade at a discount to our fair value estimates. (Learn more about Morningstar's fair value estimates.)

Below is a shortlist of quality, familiar brands whose stocks are trading at a discount.

Susan Dziubinski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.