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Quarter-End Insights

After a Sharp 2Q Rebound, Fewer Bargains in Stocks

A third of our North American coverage is undervalued compared with two thirds last quarter.

The stock market's swift recovery has us seeing much less value in the North American equity market—although pockets of opportunity remain. As concerns about the coronavirus pandemic began to dissipate and economies reopened, the Morningstar US Market Index surged almost 25% from the end of the first quarter. 

The median stock in our North American equity coverage now trades at only a 5% discount to our fair value estimate compared with a 22% discount near the end of March. Of the roughly 800 North American stocks we cover, 34% carry an undervalued rating of 4 or 5 stars. Three months ago, a hefty two thirds of our coverage was undervalued.