U.S. stocks recovered from the selloff in February and March, finishing 2020 with a 16% return, as measured by the S&P 500. Today, Morningstar considers stocks overvalued, Susan Dziubinski, director of content for Morningstar.com, wrote in a blog post this week, noting that the median stock in the firm's North American coverage universe traded at a 6% premium to the research firm's fair value estimate at year-end.
According to David Sekera, Morningstar's chief U.S. market strategist, only 18% of the stocks the firm covers have Morningstar Ratings of 4 or 5 stars.
In aggregate, energy and real estate stocks look undervalued, while the technology sector is the most overvalued.
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Michael S. Fischer
Michael S. Fischer is a longtime contributing writer for ThinkAdvisor. He previously reported on trade and intellectual property topics for the Economist Intelligence Unit and covered the hedge fund industry for MARHedge and Reuters News Service.
