13 Fresh Stock Picks for Long-Term Investors: Morningstar

At the end of the latest earnings season, Morningstar has identified opportunities to help long-term investors looking for stocks whose quarterly results signify a stronger outlook, Jakir Hossain, an associate data journalist, reported in a new blog post.

Equity analysts have incorporated results of earnings reports as they adjusted their valuation models. Although they use a long-term approach to assess a company’s value, quarterly results can influence near-term assumptions, which in turn may affect long-term growth estimates, Hossain wrote.

Moreover, analysts may adjust their fair value estimates — Morningstar’s measure of a stock’s intrinsic value — based on other than earnings-related factors, such as a new product reveal or mergers and acquisitions.

Between Jan. 1 and March 8, fair value estimates increased by 0.35%. Of the 843 U.S.-listed stocks Morningstar analysts cover, 260 received fair value increases.

Hossain noted that fair value estimate increases can lead to fresh undervalued stock opportunities for long-term investors. To find these, analysts ran a screen for undervalued stocks that saw fair value increases of 10% or more that either became recently undervalued as a result or became even more attractive in recent weeks. Thirteen stocks, each with a Morningstar 4- or 5-star rating, made the cut.

See the gallery for the 13 stocks whose fair value estimates Morningstar analysts recently raised significantly and are also trading in undervalued territory. Year-to-date returns are as of March 13, according to MarketWatch.