Valuing the Market

I’m beginning to fall in love with Morningstar’s database. I wanted to look at the valuations of a number of large-cap stocks. I decided to use a PEG ratio of 1.5 as fair value. I should say that I’m not a fan of the PEG ratio, but I simply wanted to find a rough estimate of what the market is thinking.
I looked at all the stocks that are followed by 10 or more analysts. That comes to about $8 trillion in market value, so that’s a pretty good slice of the entire market. Going by a PEG 1.5, I found that the market is undervalued by 7.4%, which sounds about right.
Here’s a list of 100 of the largest-cap stocks on Wall Street and how the market is pricing them (100% is fairly valued, more than that is overpriced, less is underpriced). My Buy List stocks are in bold.
GE 101.80%
MSFT 103.50%
C 72.33%
JNJ 109.69%
PFE 93.92%
WMT 81.79%
BAC 73.01%
AIG 60.57%
INTC 79.86%
PG 124.01%
IBM 106.60%
JPM 73.95%
CSCO 78.90%
AMGN 95.49%
WFC 73.86%
DNA 142.24%
VZ 267.93%
GOOG 102.74%
TWX 116.53%
HD 72.18%
HPQ 113.70%
DELL 73.26%
NOK 114.57%
SBC 174.74%
UPS 103.41%
QCOM 137.71%
WB 81.19%
UNH 86.13%
ABT 118.87%
MDT 109.54%
ORCL 87.83%
CMCSA 212.22%
WYE 145.30%
AXP 77.79%
LLY 123.28%
ERICY 122.93%
MWD 64.98%
BA 131.87%
GS 57.69%
MOT 107.61%
EBAY 105.16%
SAP 139.94%
TXN 82.60%
VIA.B 92.56%
UTX 95.23%
USB 76.37%
LOW 74.32%
DIS 98.23%
BLS 168.53%
YHOO 125.11%
WLP 82.07%
TGT 86.51%
WAG 104.64%
AAPL 113.44%
CCL 82.64%
MCD 128.96%
FNM 40.04%
ACL 139.69%
MET 75.60%
ALL 65.19%
EXC 146.88%
S 77.80%
PRU 70.38%
WM 66.80%
EMC 83.55%
SGP 202.36%
HON 100.29%
LEH 57.71%
KRB 79.47%
FDC 90.67%
SO 251.40%
CL 138.56%
AMAT 107.92%
CAH 95.58%
SYMC 84.92%
LMT 100.73%
DUK 201.46%
FDX 74.63%
ADP 121.60%
BAX 134.03%
AET 77.12%
STI 91.63%
ITW 81.24%
HIG 62.48%
GDT 139.03%
AFL 81.50%
ACN 86.45%
CMX 85.66%
BK 84.68%
TEVA 65.46%
NKE 77.64%
GILD 109.84%
NCC 94.44%
AT 209.18%
HCA 81.42%
BBT 94.64%
COF 48.30%
BEN 105.04%
COST 108.40%
PGR 94.05%
BBY 78.34%
SYY 102.79%
FITB 75.78%
BSX 55.37%
SYK 94.67%
SBUX 126.09%
INFY 79.92%
K 141.32%
CFC 36.47%
AMZN 178.62%
GENZ 108.34%
GDW 62.27%
CCU 128.70%
STJ 120.62%
ZMH 80.94%
GCI 96.71%
ERTS 134.06%
KSS 69.64%
STT 99.73%
PNC 107.74%
DHR 83.08%
CA 170.26%
BRCM 94.70%
SPLS 83.41%
AEP 303.93%
CI 95.56%
MHS 96.81%
LU 138.42%
GPS 69.11%
OMC 103.10%
GNW 75.50%
ADBE 124.96%
MCK 97.94%
NT 300.91%
PAYX 140.94%
MXIM 80.64%
RF 103.99%
YUM 107.50%
MAR 92.31%
ADI 120.62%
ACE 60.78%
BIIB 115.37%
MEL 101.64%
FRX 73.96%
HDI 70.35%
MRVL 85.60%
KEY 109.73%
HOT 109.78%
IR 70.77%
JNPR 98.62%
MGM 106.95%
CPB 175.52%
HET 85.46%
BBBY 73.77%
NFB 75.03%
ED 365.80%
COH 79.71%
EDS 170.09%
APOL 78.75%
LLTC 85.00%
PGN 289.75%
NTRS 107.48%
FD 79.98%
DHI 30.84%
EQR 176.85%
PHM 37.79%
TRB 126.89%
ADSK 143.60%
MI 94.36%
XLNX 101.51%
ASD 91.69%
CMA 101.68%
AMD 538.44%
KLAC 90.01%
ESRX 95.57%
TJX 74.22%
LEN 34.23%
ETN 66.10%
WFMI 192.63%
JWN 92.50%
CIT 69.12%
NSM 121.57%
LNC 72.79%
ASO 99.63%
RCL 74.06%
BMET 82.15%
CSC 89.03%
FISV 87.21%
SNV 85.24%
HLT 118.60%
NTAP 82.81%
TROW 123.43%
MEDI 331.86%
MU 399.21%
CHIR 127.89%
ABC 128.05%
LTD 84.18%
ASN 292.23%
SOV 81.46%
HUM 101.41%
Advanced Micro Devices is the most overvalued, followed by Micron and Consolidated Edison. The best bargain is D.R. Horton, followed by Lennar and Fannie Mae.

Posted by on October 5th, 2005 at 1:47 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.