Skip to Content
Premium Article

5 Undervalued Stocks With Momentum

These stocks have gained more than 20% this year yet are still trading well below our fair value estimates.

Mentioned: , , , , ,

Twilio (TWLO) shareholders are smiling these days. Why? They own the best-performing stock in our coverage so far this year, up a whopping 170% as of this writing. Perhaps not surprisingly, shares of the communications platform-as-a-service company are overvalued by our metrics, trading at a 52% premium to our fair value estimate and landing in 2-star range.

Yet outperformance and overvaluation don't always go hand in hand. We base our fair-value estimates on our expectation of future cash flows; we also take into account the predictability of those cash flows, encapsulated in our uncertainty ratings. Recent performance plays no role in our fair value assessment. We're focusing on long-term intrinsic value. And as a result, stocks that have rallied may not have reached our estimate of their long-term intrinsic value.

This article is exclusive to Morningstar Premium members.

Start a 14-Day Free Trial

Susan Dziubinski does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.