1 Newly Overvalued Stock

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Each week, we screen the US-listed stocks under Morningstar’s coverage for newly overvalued names.

For the week ended Jan. 3, one stock saw its Morningstar Rating change to 2 stars, while another two climbed into 1-star territory. Stocks rated 3 stars are fairly valued according to Morningstar analysts, while those rated 4 or 5 stars are considered undervalued.

The new 2-star stock is:

• PG&E PCG

The two new 1-star stocks, ordered by market cap, are:

• Williams WMB
• Range Resources RRC

All returns in this article are reported in the stock’s base currency, and all data is sourced from Morningstar Direct.

Newly Overvalued Stocks for the Week Ended Jan. 3

The Morningstar US Market Index fell 0.32% over the past week, leaving the overall US stock market moderately overvalued, hovering at a 9% premium to its fair value estimate on a cap-weighted basis.

Of the 873 US-listed stocks covered by Morningstar analysts:

• 36% are undervalued, 39% are fairly valued, and 24% are overvalued.
• One is newly overvalued.
• Seven are newly undervalued.
• Two moved from a 2-star rating to a 1-star rating.
• Among the newly overvalued stocks, none jumped from a 3-star rating to a 1-star rating.
• Seven are no longer overvalued.

Morningstar analysts assign every stock under their coverage a fair value estimate, which is an intrinsic measure of the stock’s worth, and an Uncertainty Rating, which captures the range of potential outcomes for that estimate. A higher Uncertainty Rating equates to a larger range of prices considered fairly valued. These two metrics and the stock’s current price determine its Morningstar Rating.

Metrics for this Week’s New 2-Star Stock

PG&E

• Morningstar Rating: 2 stars
• One-Week Return: 1.42%

Regulated electric company PG&E has climbed 4.80% over the past three months and 13.85% over the past year. The stock is trading at a 13% premium to its fair value estimate of $18 per share, with an Uncertainty Rating of Medium. PG&E is a mid-value company with no economic moat.

Metrics for this Week’s New 1-Star Stocks

Williams

• Morningstar Rating: 1 star
• One-Week Return: 4.93%

Midstream oil and gas company Williams has gained 18.43% over the past three months and 62.88% over the past year. The mid-core stock has a narrow economic moat. Williams is trading at a 42% premium to its fair value estimate of $40 per share, with an Uncertainty Rating of Medium.

Range Resources

• Morningstar Rating: 1 star
• One-Week Return: 3.22%

Oil and gas exploration and production company Range has climbed 10.03% over the past three months and 17.01% over the past year. The stock is trading at a 60% premium to its fair value estimate of $22.50 per share, with an Uncertainty Rating of High. Range is a small-value company with no economic moat.