Where to invest in Q3 2022? Here are Morningstar picks

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The second quarter of 2022 has finished, and it was marked by inflation, rising interest rates, slower economic growth, and tighter monetary policymaking.

All of these factors led to a downturn in the stock market in Q2, but the market might be poised for a comeback, according to the Chief U.S. Market Strategist Dave Sekera, who shared his views in a Morningstar interview on July 19. 

“Now, coming into the third quarter, we actually think the pendulum has swung too far to the downside. So, we actually think the markets are getting to be pretty significantly undervalued at this point”.

As a result of the possibility of a market recovery, Finbold has conducted an in-depth analysis of three of the stock picks recommended by the Morningstar analyst for the third quarter of 2022. 

In the last month, META has been trading in the $154.25 – $176.49 range, which is quite wide. Although, according to Sekera, the company is trading at half of what it is worth currently. 

He explained: 

“Meta is probably, I think, our most differentiated call from the rest of the marketplace—so, wide moat, 5 stars, trading at I think about half of what we think that company is worth”.

META 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

TipRanks analysts rate the share as a moderate buy, predicting that in the next 12 months, the average price could reach $263.56, which is 49.94% higher than the current trading price of $175.78.

Wall Street analysts’ price targets for META. Source: TipRanks

Amazon (NASDAQ: AMZN)

Regarding Amazon stock, Sekera noted that it’s trading at about a 40% discount, its fair value, he opined:

“The market’s been disappointed a little bit on that one, but you have to remember too, with Amazon, they saw huge amounts of growth during the beginning and throughout most of the pandemic.”

Amazon is expected to report earnings on the 28 of July, with the consensus earnings-per-share (EPS) forecast for the quarter being $0.15. In the last month, AMZN has been trading in the $102.52 – $118.95 range. The support zone ranges from $110.47 to $113.37, while the resistance zone ranges from $118.22 to $119.71.

AMZN 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

Notably, the consensus rating on Wall Street for the AMZN stock is a strong buy, with experts advocating to ‘buy’ Amazon and just one suggesting to ‘hold.’ Interestingly, none of the analysts propose selling the stock and predict that in the next 12 months, the average price could reach $176.04, which is 48.92% higher than the current price of $118.21. 

Wall Street analysts’ price targets for AMZN. Source: TipRanks 

The Walt Disney Company (NYSE: DIS)

Disney has recently shifted its content to its own online streaming platform, which could have caused a short-term disruption in the value of the stock. Sekera stated:

“When we think about Disney, we think that they have not only some of the best content out there, but they have some of the best platforms out there, and we’ll be able to do the best in that space.”

In the last month, DIS has been trading in the $90.23 – $100.40 range, a quite wide range. The support zone has formed from $94.34 to $95.33, while the resistance zone settled in the range from $99.62 to $100.74.

DIS 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

Meanwhile, analysts rate the stock a ‘moderate buy,’ predicting that in the next 12 months, the average price could reach $139.22, which is 39.77% higher than the current price of $99.61.

Wall Street analysts’ price targets for DIS. Source: TipRanks 

Even though Q2 was quite volatile, there seems to be quite a few noteworthy stocks investors could consider in Q3. 

As Dave Sekera points out, the above-mentioned stocks are currently all undervalued, and as a result, it may be an appropriate moment for investors to increase their equity exposures.

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.