"The Magnificent Seven stocks generally are starting to run out of steam at this point because their valuations are getting pretty full at this point of time," Morningstar's Chief Markets Strategist David Sekera told CNBC Pro on Feb. 2.
However, Sekera thinks things are looking up for small-caps and value stocks — the latter of which he says are trading at an 11% discount relative to Morningstar's fair value and look like a "good area for investors to overweight in U.S. stocks right now."
Tech stocks The chief strategist remains bullish on tech, albeit outside of the Magnificent Seven, and named Cognizant Technology Solutions and Snowflake as picks to play the theme.
Value in energy The energy sector — one of the laggards of the stock market last year — is also on Sekera's radar.
Morningstar gives stocks a rating of between one and five stars, with a top rating indicating that the shares are undervalued.
Persons:
David Sekera, Morningstar, Sekera, Russell, —, We're, doesn't, NiSource, Entergy
Organizations:
Big Tech, Apple, Meta, Microsoft, Nvidia, Tesla, CNBC Pro, Dow, Nasdaq, Tech, Technology Solutions, APA Corp, Morningstar, Exxon, APA, Entergy, WEC Energy
Locations:
Suriname, United States