The Stock Market Has Bounced, but There Are Lots of Undervalued Names

Plus: What the latest jobs report tells us, cheap software stocks, and why Berkshire Hathaway is a buy [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=37887&elqTrackId=03c18f9f618b40dd8bcd091993a82faa&elq=625c11b03a6f497894bb312291eecf46&elqaid=37887&elqat=1&elqCampaignId=17766) [Smart Investor] Smart Investor [Tom Lauricella, chief markets editor]( Twitter: [@LauricellaTom]( [Tom Lauricella] When it comes to the markets right now, it’s easy to feel a little bit like we’re in purgatory. Stocks are solidly off their bear market lows, but it’s way too early [to presume the bear market is over](. Earnings are weak, but [they’re not as bad as expected](. GDP growth is negative but [we’re probably not in a real recession]( especially when you [look at the still red hot jobs market](. The market is once again expecting big rate increases [from the Fed in September]( but at Morningstar [we think the Fed will be lowering rates next year.]( So what’s an investor to do? Look for the longer-term opportunities. Even though the market is up roughly 9% from its lows, our equity research team thinks there are plenty of them. For example, [we take a look here]( at the enterprise software space, where investors had punished names like Microsoft thinking they would get hit by a recession. It turns out that second quarter earnings are showing that a number of these companies are doing just fine, thank you. We also [take a look under the hood at video game stocks]( which are feeling the pinch of a shift in consumer behavior as pandemic concerns recede, but still offer long-term investors a number of undervalued names. At the bigger picture level, Morningstar’s U.S. strategist Dave Sekera [writes that the stock market]( is still significantly undervalued, with opportunities among both growth and value stocks, and particularly among communications services stocks (such as Google parent Alphabet). Check out Dave’s piece: [Stocks May Have Bounced Back, But the Market Remains Significantly Undervalued]( [Stocks May Have Bounced Back, But the Market Remains Significantly Undervalued]( Both value and growth are looking undervalued, with communication services the cheapest sector. David Sekera [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] Markets and the Economy [Which Enterprise Software Stocks Are Best Weathering the Macroeconomic Storm?]( [Which Enterprise Software Stocks Are Best Weathering the Macroeconomic Storm?]( Microsoft, Amazon, Tyler Technologies, and Manhattan Associates are among those that Morningstar analyst Dan Romanoff highlights for posting solid second-quarter results. Jakir Hossain [Video Game Stocks Hit by Slowdown in Spending]( [Video Game Stocks Hit by Slowdown in Spending]( Electronic Arts in a sweeter spot but fairly valued. Sandy Ward [3 Dividend Stocks for August 2022]( [3 Dividend Stocks for August 2022]( These names are popular with income investors. David Harrell [Why Berkshire Hathaway Stock Is a Buy]( [Why Berkshire Hathaway Stock Is a Buy]( Warren Buffett’s company is a solid candidate for downside protection, says Morningstar’s analyst—and the stock is attractively priced, too. Greggory Warren [TIPS Can Help With Inflation, but Are You Courting Other Risk?]( [TIPS Can Help With Inflation, but Are You Courting Other Risk?]( Treasury Inflation-Protected Securities are one of the best direct hedges against inflation, but they're subject to other types of risk. Amy C. Arnott [Does Your Fund Reflect Your Personal Values?]( [Does Your Fund Reflect Your Personal Values?]( Add Morningstar’s new product involvement screens to your sustainable-investing toolkit. Leslie Norton Chart of the Week [Why We Expect the Fed to Cut Interest Rates in 2023]( [Why We Expect the Fed to Cut Interest Rates in 2023]( Four key takeaways from our updated interest-rate and inflation forecast. Preston Caldwell [Read More]( Share: [facebook]( [twitter]( [linkedin]( Popular This Week [10 Stocks for a Recession]( These undervalued stocks come from high-quality companies in defensive sectors. Susan Dziubinski [3 Great ETFs for Contrarians]( These low-cost exchange-traded funds could provide exceptional long-term performance— for those willing to wait. Daniel Sotiroff [How to Build a Portfolio You Don't Have to Babysit]( These four steps can help you craft a (mostly) hands-off portfolio. Christine Benz [How Advisors Can Help Clients Invest Sustainably in Retirement Accounts]( Don’t let limited plan options prevent clients from investing the way they want. Phuong Luong [Is Oakmark Fund Still a Good Investment?]( The fund is having a tougher year than its peers. Here's what Morningstar's analyst thinks. Katie Rushkewicz Reichart Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. 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