Morningstar Chief US Market Strategist Dave Sekera says investors are indiscriminately selling the stocks right now, but most of these companies will be on the road to recovery before too long.
"We think the market is overreacting to short-term pressures and have pushed valuations down too far," he wrote in a recent note."The regional banking business model is not broken. Over the long term, these banks will continue to earn returns higher than their cost of capital." The picture isn't entirely positive. Sekera wrote that earnings for regional banks will continue to decline for the rest of 2023, then start to recover next year. But that's the extent of the damage he's expecting.
With that forthcoming recovery in mind, Sekera also wrote that the following 11 stocks are severely undervalued right now — in fact, he estimates their fair values are 20% to 155% greater than their most-recent closing prices. All figures were calculated as of Thursday's close, and the stocks below are ranked from lowest to highest based on how much upside they have relative to Morningstar's fair value estimates.
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