2 New 4-Star Stocks

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

For the week ended Nov. 29, two stocks saw their Morningstar Ratings change to 4 stars, while one dropped into 5-star territory. Stocks rated 3 stars are fairly valued according to Morningstar analysts, while those rated 1 or 2 stars are considered overvalued.

The two new 4-star stocks, ordered by market cap, are:

• BAE Systems BAESY
• XPeng XPEV

The new 5-star stock is:

• America Movil AMX

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

Newly Undervalued Stocks for the Week Ended Nov. 29

The Morningstar US Market Index rose 1.03% over the past week, leaving the overall US stock market slightly overvalued, hovering at a 5% premium to its fair value estimate on a cap-weighted basis.

Of the 878 US-listed stocks covered by Morningstar analysts:

• 31% are undervalued, 38% are fairly valued, and 31% are overvalued.
• Two are newly undervalued.
• 18 are newly overvalued.
• One moved from a 4-star rating to a 5-star rating.
• Two moved from a 5-star rating to a 4-star rating.
• Among the newly undervalued stocks, zero jumped from a 3-star rating to a 5-star rating.
• 13 are no longer undervalued.

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 4-Star Stocks

BAE Systems

• Morningstar Rating: 4 stars
• One-Week Return: -6.96%

Aerospace and defense company BAE has lost 12.97% over the past three months and gained 20.84% over the past year. The large-core stock has a wide economic moat. BAE is trading at a 16% discount to its fair value estimate of $74 per share, with an Uncertainty Rating of Medium.

XPeng

• Morningstar Rating: 4 stars
• One-Week Return: 1.18%

Auto manufacturer XPeng has climbed 53.11% over the past three months and dropped 29.78% over the past year. The stock is trading at a 21% discount to its fair value estimate of $15.20 per share, with an Uncertainty Rating of Very High. XPeng is a large-value company with no economic moat.

Metrics for this Week’s New 5-Star Stock

America Movil

• Morningstar Rating: 5 stars
• One-Week Return: -1.26%

Telecom services firm America Movil has lost 8.78% over the past three months and 14.58% over the past year. The large-core stock has a narrow economic moat. America Movil is trading at a 33% discount to its fair value estimate of $22 per share, with an Uncertainty Rating of Medium.