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A Rocky November Leaves Stocks Somewhat Undervalued

Morningstar.com

With a volatile November in the books, we thought it would be a good time to check in on our market fair value.

This metric 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 0.94. This indicates that the market is about 6% undervalued today. That compares to a 52-week high of 1.11 seen on Jan. 26 and a 52-week low of 0.92 reached on Oct. 29.

There isn't a significant gap in average valuations by sector. The real estate, healthcare, and utilities sectors are about fairly valued.

The least expensive sector is energy, which is about 15% undervalued by our estimates. Some of our analysts' favorite names here include Cenovus Energy, Enbridge, and Enterprise Products Partners. 

Notably, tech stocks are about 10% undervalued today, after having been overvalued for most of 2017 and this year. Some top picks in the sector include Microchip Technology, Intel, and Applied Materials.