we think this selloff has pushed the broad U.S. equity market down too far. Following this downturn, our measure of market valuation is now well into the undervalued territory. According to a composite of the stocks followed by Morningstar’s equity research analyst team, the broad U.S. equity market is now trading at a 12% discount to fair value.
Many suggestions, of growth stocks trading at over 30% discount to FVE, viz. Salesforce, Meta, Amazon, Alphabet…
we think this selloff has pushed the broad U.S. equity market down too far. Following this downturn, our measure of market valuation is now well into the undervalued territory. According to a composite of the stocks followed by Morningstar’s equity research analyst team, the broad U.S. equity market is now trading at a 12% discount to fair value.
You know, I do find these opinions of overall market value rather confusing. For every person who says that the market is undervalued, there’s someone else who will tell you it’s close to historically high overvaluations.
Many suggestions, of growth stocks trading at over 30% discount to FVE, viz. Salesforce, Meta, Amazon, Alphabet…
FWIW, I’ve been buying meaningful quantities of two of those (Meta and Alphabet) and have been looking at the other two very carefully. I don’t necessarily think Alphabet is undervalued, per se, but more that it’s trading at a fair price for a very strong business with plenty of room to grow over the next decade.
Amazon is slightly awkward to put a value to because there are multiple businesses going on (retail, AWS, Prime, etc.).
For Salesforce the question is what the margins would be when the company eventually stops growing and turns into a cash cow. Or the question could be turned on its head: what margins would need to happen to justify the market valuation? How likely are those margins to be hit or to be exceeded ten years out, given an assumed level of growth over that time frame?