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Quarter-End Insights

Pullback Makes Pockets of Value

Health care stocks and wide-moat firms are in the bargain bin.

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After a volatile six months, stocks are entering the second half of the year down about 5% for the year to date. With the market lower but corporate profitability continuing to improve, stocks are beginning to look more reasonably valued at today's levels.

We reach that conclusion by aggregating the fair value estimates of the 1,700 companies covered by Morningstar's equity analyst staff to calculate a bottom-up market fair value--which stood at 0.92 (or 8% undervalued) as of June 30.

Jeremy Glaser has a position in the following securities mentioned above: MSFT. Find out about Morningstar’s editorial policies.