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Commentary

Be Thankful for These 3 Stocks

Equity valuations are becoming further stretched, but there is still a case for holding high-quality companies for the long term.

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There are plenty of things to be thankful for this year, but one thing you aren't likely to hear around the Thanksgiving table is an outpouring of excitement over the current state of equity valuations.

And that's for good reason. As the major stock indexes keep hitting new (nominal) highs and earnings growth continues to lag, valuations of the U.S. stock market keep getting further stretched. As Morningstar ETFInvestor Sam Lee discussed earlier this week, several valuation metrics from the Shiller P/E to the Dividend Growth Model seem to be pointing to above-average levels and returns are likely to be more muted in the future.

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