The firm estimates fair value based on its projection of a company's future cash flows and the predictability of those flows.
The best opportunities are now in value stocks that are trading at about a 22% discount to fair value, Sekara noted.
Currently, the real estate sector is the most undervalued sector, with REITs trading at a 26% discount to fair value, Sekara said.
Finally, American Tower (AMT), which owns and operates wireless and broadcast communications infrastructure, trades at a 24% discount to fair value.
Two other five-star stocks that remain significantly undervalued are AT&T and Verizon, trading at a 35% discount to fair value.
Persons:
Morningstar's Preston Caldwell, Caldwell, Dave Sekara, Sekara, Wells
Organizations:
Treasury, Morningstar, Simon Property Group, Realty Trust, Communications, Verizon, Citigroup, PNC, US Bank