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Today's Undervalued and Overvalued Sectors

Energy stocks look the priciest today while the communication services and healthcare sectors are attractive.

Today's Undervalued and Overvalued Sectors

Is the market cheap or expensive? And what sectors offer the best opportunity today? This is the Market Fair Value update for Thursday, December 8.

The Market Fair Value shows the median price to fair value ratio of all of the individual stocks we cover. In essence, it shows how big of a gap, on average, we see between market prices and our estimate of intrinsic value across the entire market or a specific sector.

Today's ratio for all rated stocks is 1.01--this indicates that the market is only slightly overvalued. This compares to a 52-week high of 1.04 seen back in early September and a 52-week low of 0.86 reached in February.

The most overvalued sector is energy at 1.21--that's 21% above our estimate of intrinsic value. The OPEC production-cut deal has sent the stocks of energy producers higher, but our energy analyst team thinks the positive impact could be short lived, and they haven't changed their long-term view of oil prices.

The most undervalued sectors are communications services and healthcare at 0.88--that's 12% below our estimate of intrinsic value.

Some of the most attractively priced stocks in the healthcare sector are Teva Pharmaceutical Industries, Allergan, and Roche Holding.

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