18 Newly Overvalued Stocks for the Week

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

For the week ended Nov. 22, 18 stocks saw their Morningstar Ratings change to 2 stars, while another three 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 five new 2-star stocks with the largest market capitalization are:

• S&P Global SPGI
• CrowdStrike Holdings CRWD
• Atlassian TEAM
• Snowflake SNOW
• Take-Two Interactive Software TTWO

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

• Netflix NFLX
• Range Resources RRC
• EVgo EVGO

The full list of new 2-star stocks can be found at the bottom of this story.

Newly Overvalued Stocks for the Week Ended Nov. 22

The Morningstar US Market Index rose 2.11% over the past week, leaving the overall US stock market moderately overvalued, hovering at a 9.00% premium to its fair value estimate on a cap-weighted basis.

Of the 880 US-listed stocks covered by Morningstar analysts:

• 32% are undervalued, 38% are fairly valued, and 29% are overvalued.
• 18 are newly overvalued.
• Six are newly undervalued.
• Three moved from a 2-star rating to a 1-star rating.
• None of the newly overvalued stocks went from a 3-star rating to a 1-star rating.
• 12 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 are used to determine its Morningstar Rating.

Metrics for this Week’s New 2-Star Stocks

S&P Global

• Morningstar Rating: 2 stars
• One-Week Return: 2.22%

Financial data firm S&P Global has climbed 3.34% over the past three months and 24.96% over the past year. The fair value estimate for S&P Global rose to $480 from $470 during the week. It ended the week trading at a 7% premium to its new fair value estimate, with an Uncertainty Rating of Low. S&P Global is a large-core company with a wide economic moat.

CrowdStrike Holdings

• Morningstar Rating: 2 stars
• One-Week Return: 10.54%

Software infrastructure firm CrowdStrike has gained 39.09% over the past three months and 77.60% over the past year. The large-growth stock has a narrow economic moat. CrowdStrike is trading at a 24% premium to its fair value estimate of $300, with an Uncertainty Rating of High.

Atlassian

• Morningstar Rating: 2 stars
• One-Week Return: 8.56%

Software application firm Atlassian is up 67.18% over the past three months and 44.33% over the past year. The stock’s price is 18% above its fair value estimate of $220, with an Uncertainty Rating of High. The mid-growth stock has a narrow economic moat.

Snowflake

• Morningstar Rating: 2 stars
• One-Week Return: 32.93%

Software application firm Snowflake has climbed 45.33% over the past three months and dropped 0.88% over the past year. The fair value estimate for Snowflake was cut to $129 from $187 during the week. It ended the week trading at a 30% premium to its new fair value estimate, with an Uncertainty Rating of Very High. Snowflake is a mid-growth company with no economic moat.

Take-Two Interactive Software

• Morningstar Rating: 2 stars
• One-Week Return: 5.93%

Electronic gaming company Take-Two is up 18.56% over the past three months and 20.70% over the past year. The stock’s price is 21% above its fair value estimate of $155, with an Uncertainty Rating of High. The mid-growth stock has a narrow economic moat.

Metrics for this Week’s New 1-Star Stocks

Netflix

• Morningstar Rating: 1 star
• One-Week Return: 8.96%

Entertainment company Netflix is up 30.31% over the past three months and 87.82% over the past year. The stock’s price is 63% above its fair value estimate of $550, with an Uncertainty Rating of High. The large-growth stock has a narrow economic moat.

Range Resources

• Morningstar Rating: 1 star
• One-Week Return: 6.82%

Oil and gas exploration and production company Range has climbed 18.76% over the past three months and 7.91% over the past year. The stock is trading at a 59% premium to its fair value estimate of $22.50, with an Uncertainty Rating of High. Range is a small-value company with no moat.

EVgo

• Morningstar Rating: 1 star
• One-Week Return: 25.69%

Specialty retail firm EVgo has gained 70.05% over the past three months and 112.00% over the past year. The small-growth stock has no moat. EVgo is trading at an 82% premium to its fair value estimate of $3.50, with an Uncertainty Rating of Very High.