Investors do not necessarily need to choose between companies classified as traditional value stocks and businesses associated with faster growth. Some stocks combine characteristics of both investing styles, potentially giving portfolios access to expanding earnings, established operations and prices that remain below analysts’ estimates of long-term value.
Morningstar Chief U.S. Market Strategist Dave Sekera and investment specialist Susan Dziubinski examined that middle ground during the July 20 episode of The Morning Filter. Their discussion included inflation, Federal Reserve policy, corporate earnings, major stock selloffs and five companies Morningstar considers undervalued blends of growth and value.
The conversation began with inflation reports that were more favorable than investors had expected. Cooling inflation can reduce pressure on the Federal Reserve to maintain tighter monetary policy, but one group of encouraging reports does not guarantee that officials will immediately change interest rates.
Federal Reserve policymakers must also consider employment, consumer spending, economic growth, energy prices and the possibility that inflation could accelerate again. Those competing forces make the outlook for monetary policy later in 2026 important for both growth companies and traditional value stocks.
Growth stocks can be particularly sensitive to interest-rate expectations because much of their estimated worth is tied to earnings expected further into the future. Value-oriented businesses may respond differently depending on their industries, balance sheets and ability to generate cash in the current economic environment.
Sekera and Dziubinski also previewed earnings reports from Alphabet, Tesla and Intel. Each company represents a different part of the technology sector, but their results could provide broader information about artificial-intelligence investment, consumer demand, corporate spending and the health of the semiconductor industry.
The hosts additionally identified Charles Schwab and Blackstone as companies investors should monitor. Their performance can offer information about trading activity, asset-management demand, private markets and how investors are responding to changing interest rates and economic uncertainty.
The episode reviewed results from Taiwan Semiconductor Manufacturing Company and ASML, two companies occupying critical positions in the global semiconductor supply chain. Their earnings arrived as investors questioned whether enormous spending on artificial intelligence, data centers and advanced chips could continue supporting elevated technology valuations. Morningstar’s discussion considered whether either company still offered an attractive investment opportunity following its latest results.
IBM and SpaceX were examined after major declines in their share prices. A sharp selloff can create an opportunity when investors react more severely than changes in a company’s underlying value justify. However, a lower share price alone does not make a stock inexpensive, particularly when the decline reflects deteriorating revenue, weaker profitability, execution problems or assumptions that were previously too optimistic.
PayPal was another company included in the discussion because of the possibility of a buyout. Acquisition speculation can lift a stock, but investors must separate a company’s stand-alone value from the uncertain premium that a potential buyer might offer. A transaction can be delayed, renegotiated or abandoned, leaving shareholders dependent once again on the company’s normal operating performance.
The broader portfolio question involved whether investors should continue using a barbell strategy that combines growth stocks on one side with value stocks on the other. That approach can help prevent a portfolio from depending entirely on one market style, but changing valuations may create opportunities among companies positioned between those two categories.
Morningstar’s five featured stocks were Intercontinental Exchange, American Tower, Northrop Grumman, Hershey and Amazon. Together, the companies represent financial-market infrastructure, communications real estate, defense, consumer products and technology-driven commerce.
Intercontinental Exchange was the first selection. The company operates financial exchanges and market-data businesses, including the New York Stock Exchange. Its combination of established infrastructure, recurring financial information services and opportunities for continued expansion allows it to exhibit characteristics of both value and growth investments.
Rather than depending on a single consumer product, Intercontinental Exchange benefits from activity across trading, clearing, data and financial technology. Morningstar has previously emphasized the company’s network effects and competitive advantages, particularly in energy futures and other markets where liquidity attracts additional participants.
American Tower was the second stock. The real estate investment trust owns communications infrastructure used by wireless carriers and other network operators. It can appeal to income-oriented investors because of its REIT structure while also offering exposure to expanding mobile-data consumption and the continued development of communications networks.
Its business does not fit perfectly into a traditional defensive-value category because future demand is connected to technological growth. At the same time, its physical infrastructure, contracts and distributions distinguish it from faster-moving technology companies whose valuations depend heavily on distant earnings expectations.
Northrop Grumman was the third selection. The defense contractor combines an established portfolio of government programs with potential growth tied to national-security spending, aerospace systems and advanced military technology.
Defense companies can offer long-term revenue visibility because major government projects frequently extend across several years. They are not free from risk, however. Program delays, contract changes, cost overruns, political decisions and government-budget negotiations can affect earnings and cash flow.
Morningstar’s discussion also compared Northrop Grumman with Lockheed Martin and RTX as investors prepared for defense-company earnings. Northrop Grumman and Lockheed Martin were identified as undervalued heading into those reports.
Hershey was the fourth stock. The confectionery company represents the more defensive portion of the group because consumers continue purchasing familiar food brands across different economic conditions.
Hershey has nevertheless faced significant pressure from elevated cocoa costs and other input expenses. Those challenges have weighed on investor sentiment, but they may also create an opportunity when the market assumes current cost conditions will continue indefinitely.
Morningstar’s selection reflects the company’s established brands, pricing capabilities and dividend, alongside the possibility that profitability could improve when commodity pressures moderate. Hershey therefore provides traditional value and income characteristics while retaining opportunities for longer-term earnings recovery.
Amazon was the fifth and final recommendation. Morningstar described the stock as trading approximately 12% below its fair-value estimate, enough to place it within four-star territory. Unlike Hershey and American Tower, Amazon was not selected for dividend income.
Amazon remains primarily associated with growth because of Amazon Web Services, advertising, e-commerce and the company’s extensive technology investments. However, its size, established market positions, improving profitability and discounted valuation give it qualities that extend beyond the conventional definition of a high-priced growth stock.
The five selections demonstrate why rigid investment labels can become limiting. Intercontinental Exchange and American Tower combine established cash-generating assets with structural growth. Northrop Grumman operates within a mature industry while participating in advanced aerospace and defense programs. Hershey offers defensive demand and income alongside recovery potential, while Amazon combines substantial growth opportunities with increasingly mature businesses.
Morningstar’s central argument was not that investors should abandon diversification or purchase every company that falls between value and growth. Instead, investors can evaluate businesses according to competitive advantages, cash generation, uncertainty, valuation and future opportunities without allowing a style label to determine the entire decision.
