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So Where Are the Equity Values?

Bargains are hard to find in a market hovering just above fairly valued levels, but new data may provide some clues.


As anyone who follows the markets knows, stock bargains are hard to come by these days. The market's recent record highs might make investors feel good about their equity holdings. However, for those looking to trade into new opportunities, or for those who have had cash languishing on the sidelines for months or even years, these are challenging times indeed.

Estimates for the market's overall fair value suggest it is trading at a slight premium. A look at this site's Market Fair Value page, which includes data derived from our equity analysts' fair value estimates for the stocks they cover, suggests stocks were trading at 1.03 times their fair value, meaning they are 3% overvalued, as of the end of trading July 21. However, Morningstar recently developed an even broader valuation measure for stocks that assigns fair value estimates and other metrics to virtually all stocks, not just those covered by our analyst team. The Quantitative Morningstar Rating for stocks is calculated using an algorithm designed to predict the Morningstar Rating for stocks that one of our analysts would assign to a stock. These so-called quant ratings have been available to Morningstar's institutional customers since 2013, and there are plans to integrate them into in the future.

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