33 Undervalued Stocks to Buy Before the Market Shifts Again

The US stock market was up 1.69% during the third quarter, according to the Morningstar US Market Index. Heading into the fourth quarter, stocks were trading 10% below our fair value estimate.

What might that mean for the remainder of the year?

“While the broad market appears to be trading at an attractive margin of safety below our valuations, we think the US stock market is entering an especially risky environment. Where we see undervaluation is extremely concentrated, momentum has reversed course, and macro-dynamics are turning negative,” writes Morningstar chief US market strategist David Sekera in his Q4 2026 stock market outlook. He notes that the market continues to expect one more interest rate hike by the end of the year, and he thinks inflation will likely remain elevated as oil prices continue to climb higher.

Which Stocks Are Most Undervalued?

Here’s how stock market valuations look through two different lenses:

• By investment style, small-value stocks are the most undervalued, trading 26% below our fair value estimates. Meanwhile, mid-growth stocks look most overvalued.
• By sector, consumer defensive and energy stocks look the most overvalued. Consumer cyclicals and communication-services stocks look most undervalued heading into the fourth quarter.

33 Undervalued Stocks to Buy Before the Market Shifts Again

Here’s the new list of top stock picks from Morningstar’s analysts for the fourth quarter of 2026.

1. Albemarle ALB
2. Alliant Energy LNT
3. Alphabet GOOGL
4. Amazon.com AMZN
5. Antero Resources AR
6. Bath & Body Works BBWI
7. Baker Hughes BKR
8. BioMarin Pharmaceutical BMRN
9. Broadcom AVGO
10. Capri Holdings CPRI
11. CarMax KMX
12. Clorox CLX
13. Comcast CMCSA
14. Disney DIS
15. DTE Energy DTE
16. Edison International EIX
17. Expand Energy EXE
18. Fiserv FISV
19. GE HealthCare GEHC
20. Healthpeak Properties DOC
21. Hershey HSY
22. Invitation Homes INVH
23. Kilroy Realty KRC
24. Kraft Heinz KHC
25. Lennar LEN
26. LPL Financial LPLA
27. Lululemon LULU
28. Medline MDLN
29. Nu Holdings NU
30. Omnicom OMC
31. Qnity Electronics Q
32. Solstice Advanced Materials SOLS
33. Vontier VNT

Here are some key metrics about each undervalued stock to buy and commentary about each sector. Data for the analyst stock picks is as of Oct. 8, 2026.

stocks underperformed the broad market during the third quarter of 2026. About half of the stocks that Morningstar covers in the sector are trading with of 4 or 5 stars, which means they’re undervalued. Many of the stocks in the metals and mining industry are overpriced, while there’s plenty of opportunity in the specialty chemicals industry.

The

sector outperformed the broad market during the third quarter. About half of the stocks we cover in the sector are trading in the 4- and 5-star range with opportunities in most industries.

stocks underperformed the market during the third quarter of 2026. This sector also looks significantly undervalued at the start of the fourth quarter. Two-thirds of the stocks in the sector are trading at 4- and 5-star levels, with opportunities across industries.

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stocks lagged the broad market during the third quarter, and the sector is fairly valued heading into the fourth quarter. About half of the stocks we cover in the sector look undervalued, with alcoholic beverages and consumer packaged goods industries as especially attractive.

stocks significantly outperformed the broader market during the third quarter. Only 22% of the energy stocks we cover look undervalued heading into the new quarter, concentrated largely in oil and gas exploration and production names.

The

sector slightly underperformed the broad market during the quarter. Despite that, less than one-third of the financial services stocks we cover look undervalued. We see opportunities in the credit services and financial data and stock exchanges industries.

stocks outperformed the broad market during the third quarter. About 40% of the healthcare stocks we cover look undervalued, with opportunities clustered in biopharma, healthcare plans, and medical devices.

stocks significantly underperformed the broader market for the quarter, yet only about one-third of the stocks in the sector are trading in the 4- and 5-star range. Opportunities in the sector exist in the aerospace & defense, business services, and construction industries.

stocks fell behind the broad market during the third quarter. About 60% of the stocks we cover in the sector are undervalued.

stocks outperformed the broad market during the quarter. Just over one-third of the names look undervalued, and we now see some of the best opportunities with the hyperscalers and IT Services.

stocks significantly underperformed the market during the third quarter of 2026, which has created opportunity in the sector: Nearly two-thirds of the stocks in the utilities sector look undervalued.

How to Find Undervalued Stocks to Buy

Undervalued stocks are those that trade below what they’re worth. Investors can turn to several metrics to gauge a stock’s worth. Some investors use standard metrics, such as P/E or price/cash flow. Others may look at a stock’s price relative to a company’s future growth prospects or at where a stock is trading relative to its 52-week high price.

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