As bull market hits record, stocks slightly overvalued
The technology sector looks the most pricey today while communications services appears to be the cheapest.
With the current bull market now the longest in history and the S&P 500 reaching an all-time high this week, we thought it would be a good time to check in on our market fair value.
This metric shows how big of a gap, on average, we see between market prices and our estimate of intrinsic value across the entire market or a specific sector.
The current ratio for all rated stocks is 1.02. This indicates that the market is slightly overvalued. That compares to a 52-week high of 1.11 seen in January and a 52-week low of 0.97 reached in April.
There isn't a large gap in average valuations by sector. The most overvalued is technology at 1.06 - that's 6 per cent above our estimates. The industrials, consumer cyclical, and basic materials sectors are close behind, looking 4 per cent overvalued.
The most undervalued sector is communications services at 0.96 - that's 4 per cent below our estimate of intrinsic value. Some of our top picks in the communications services sector include Comcast, China Mobile, and BT Group.