Stock Market Outlook: Scarce Opportunities, but Pockets of Value Remain
The financial services sector is the most undervalued, with banks offering particularly attractive opportunities.
The financial services sector is the most undervalued, with banks offering particularly attractive opportunities.
The Morningstar Global Markets Index climbed 11% in the first quarter to March 25, recovering nearly all the ground lost in the fourth quarter of 2018. From a bottom-up perspective, global equities are now only slightly undervalued. The median stock across our 1,500-plus coverage now trades 4% below our fair value estimate compared with a 14% discount toward the end of 2018. Not surprisingly, we also see fewer compelling investment opportunities, with the number of 5-star stocks down by half since year-end.
Full Quarter-End Coverage
Communication Services: 5G Wireless Will Prove More Evolutionary Than Revolutionary
Technology: Semiconductors the Most Attractive Tech Subsector
Financial Services: Interest-Rate Expectations Have Pressured Performance
Energy: Stocks, Oil Prices Have Rebounded, but Some Opportunities Remain
Healthcare: Stock-Picking Increasingly Important
Industrials: Attractive Opportunities in Industrial Distributors
Utilities: Valuations Near Peak, but Dividend Yield, Growth Are Tough to Pass Up
Consumer Defensive: Brand Investments Are Key
Consumer Cyclical: Firms Exposed to E-Commerce, China Have Advantage
Basic Materials: Few High-Upside Investment Opportunities
Real Estate: Firms Sensitive to Interest Rates in Short Term, but Less So in Long Term
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