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Are Stocks Overpriced Today?

Morningstar.com

The market continued its upward trend in February. Stocks are up more than 11% so far this year. In light of this strong performance, how do valuations look today?

Our market fair value 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.

The current ratio for all rated stocks is 0.97. This indicates that the market is about 3% undervalued today. According to our measures, the market is about as expensive as it was a month ago.

There aren't huge differences in valuation by sector. The real estate, healthcare, utilities and industrials sectors are slightly overvalued. The industrials sector saw the largest increase in average valuation during the month.

Energy remains the least expensive sector: It's about 11% undervalued by our estimates. Three of the least expensive stocks in the sector are Nabor Industries, Cenovus Energy, and Energy Transfer LP.