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Quarter-End Insights

Our Outlook for the Market

Five-star picks are more scarce since the market rally, but wide-moat opportunities can still be found.

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We thought the market looked cheap back in March, but it looks closer to fairly valued today. We still see buying opportunities, especially among "wide moat" companies. And we've been raising our fair value estimates, on balance, in recent months. But the market rally since March has considerably closed the wide gap between price and fair value that prevailed during 2008 and into early 2009. "Consider buys" have grown increasingly scarce.

That's the basic message from our bottom-up research on over 2,000 individual companies. We estimate fair values for these firms using discounted cash flow methods, and we regularly track those fair values along with the underlying stock prices. You can do the same with our Market Valuation Graph. It shows the median price to fair value ratio for our whole research coverage. That tool also breaks the data out for NYSE vs. Nasdaq stocks as well as for the companies in our economic moat and uncertainty categories.

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