Investing Insights Where to Find Bargain Stocks in an Expensive Market
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Feb 21, 2025 David Harrell, Editor of Morningstar’s StockInvestor newsletter, dives into stock valuation trends and identifies hidden bargains in a pricey market. He reveals insights from a watchlist of 120 stocks, emphasizing the importance of looking beyond general market trends. Discussion includes the evolution of the Morningstar Style Box, findings on undervalued mega-cap stocks like Apple and NVIDIA, and an analysis of small-cap stocks. Harrell also highlights high-growth stocks achieving impressive scores, providing valuable tips for savvy investors.
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Style Box Evolution
- The Morningstar Style Box evolved from a four-square grid to a nine-segment grid.
- This change allows for a more nuanced categorization of stocks and portfolios, including those that are neither purely value nor growth.
Value-Growth Score
- The value-growth score is a sophisticated metric combining historical and forward-looking financial measures.
- It creates separate value and growth scores, then combines them for an overall score relative to peers.
Deeper Analysis
- Investors should look beyond overall market trends reflected in the style box.
- Large-cap growth outperformance doesn't mean all stocks in that category are expensive.