Morningstar Runs the Numbers

Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.

209,000 The U.S. economy added 209,000 new jobs in July, exceeding consensus forecasts as well as the expectations of Bob Johnson, Morningstar's director of economic analysis. The unemployment rate fell to a 16-year low of 4.3%. Johnson says numbers that were better than expected in food services, manufacturing, and healthcare get the credit.

"It wasn't a great, general groundswell of jobs across all sectors. A couple of sectors did really well, that really weren't expected to do as well, and so we came in a little better than expected, and that's probably very good news for the economy."

5 The first step when seeking an advisor is to think through what you're looking for: your goals in seeking an advisor, what sort of relationship makes sense given those goals, and how much help you expect to need on an ongoing basis, among other issues. Director of personal finance Christine Benz offers five questions to ask yourself before choosing an advisor.

$145 We raised our fair value estimate for Apple by 5%, to $145 per share, after the firm reported strong fiscal third-quarter earnings. IPad unit sales and services revenue were notably strong, while premium iPhone sales (iPhone 7 and 7 Plus) held up well during the usual summer lull before new iPhone launches in the fall. Longer term, however, Morningstar director of technology, media, and telecom equity research Brian Colello says he is only cautiously optimistic about the upcoming iPhone.

"We think Apple has a good chance to capture even higher prices in the near term, but question the extent of cannibalization on its traditional high-end tier of iPhones (iPhone 7s), replacement cycles lengthening thereafter (as iPhone X customers may no longer upgrade on an annual basis), and whether an iPhone X introduction means that Apple can create an ongoing tier of $999-plus devices, or if this ultra-premium launch is a one-time item (at worst) or will occur irregularly."

19 We combed our coverage area to find some competitively advantaged stocks that have had the wind at their back but still look undervalued. Specifically, we screened for stocks trading at at least a 10% discount to our fair value estimates, with a moat rating of wide or narrow (meaning we think they have competitive advantages that fend off competitors for at least a decade). We added the criterion that the stocks had outperformed the S&P 500 over the trailing three-month period. These 19 companies made the list.

$404,000 Healthcare is one of the largest areas of expense in retirement--a healthy 65-year-old couple retiring this year can expect to spend $322,000 (today's dollars) on Medicare premiums and dental insurance, according to Healthview Services. Add deductibles, copays, hearing, vision, and dental cost sharing, and that figure rises to $404,000. Morningstar contributor Mark Miller offers some planning strategies that can help mitigate retirement healthcare costs: retirement timing, investing, and two tax-advantaged vehicles that can play a role (health savings accounts and Roth IRAs).

$93 trillion In 2016, aggregate household wealth in the U.S. reached a new high of almost $93 trillion, hitting a post-World War II record of 6.61 times annual disposable personal income, according to a recent article in the St. Louis Fed publication In the Balance. But is the peak in household wealth a cause for celebration or concern?

"Does the recent peak in household wealth herald a renewed collapse in asset values and another recession? Only time will tell for sure, but the composition of today's record household wealth might give us some comfort."

3 In a low-volatility environment such as the one we find ourselves in today, measures of volatility such as standard deviation may understate the potential risk of an investment and create a false sense of security. Director of manager research North America Thomas Lancereau explores three funds that sport low backward-looking risk ratings that could be riskier than they appear.

$37 We don't expect to make any major changes to our $37 fair value estimate following Pfizer's second-quarter results, which were largely in line with both our and consensus expectations. Director of healthcare equity research and equity strategy Damien Conover noted that he continues to view the stock as a good opportunity at current prices.

"We continue to view the stock as undervalued, with the investment community underappreciating both Pfizer's pipeline and recently launched drugs, including cancer drug Ibrance. Additionally, Pfizer's wide moat looks secure, buoyed by a very diverse drug portfolio with strong pricing power."

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