5 New 5-Star Stocks This Week

Every Monday, get Morningstar’s insights on company news, the latest stock market trends, and in-depth company reports from our analysts. Sign up for our Stock Strategist newsletter here.

Once a week, we screen the US-listed stocks under Morningstar’s coverage for newly undervalued names—those whose prices have just fallen into ranges worthy of 4- or 5-star

. For the week ended Jan. 30, 20 stocks saw their ratings change to 4 stars, while five joined the 51 US-listed names in 5-star territory.

The five new 5-star stocks, ordered by market capitalization, are:

• SAP SAP
• ServiceNow NOW
• PayPal Holdings PYPL
• Fidelity National Information Services FIS
• Elastic ESTC

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

What Is the Morningstar Rating for Stocks?

The Morningstar Rating can help investors identify stocks that are truly undervalued or overvalued, cutting through the market noise. The rating is determined by three factors: a stock’s price, its

—Morningstar’s estimate of its intrinsic worth—and its , which captures the range of potential outcomes for that estimate. Stocks rated 4 or 5 stars are considered undervalued, those rated 3 stars are fairly valued, and the ones rated 1 or 2 stars are considered overvalued.

The Latest Stock Valuation Changes

The Morningstar US Market Index rose 0.1% over the past week as of Jan. 30, leaving the overall US stock market moderately undervalued, hovering at a 5.0% discount to its fair value estimate on a market cap-weighted basis.

Of the 824 US-listed stocks covered by Morningstar analysts:

• 34% are undervalued, 40% are fairly valued, and 26% are overvalued.
• 20 are newly undervalued.
• 20 are newly overvalued.
• Five moved from a 4-star rating to a 5-star rating.
• Three moved from a 5-star rating to a 4-star rating.
• None of the newly undervalued stocks jumped from a 3-star rating to a 5-star rating.
• 10 are no longer undervalued.

Metrics for This Week’s New 5-Star Stocks

SAP

• Morningstar Rating: ★★★★★
• Fair Value Estimate: $317.00
• Uncertainty Rating: Medium

Software application firm SAP dropped 13.00% over the past week. The company’s stock is down 22.44% over the past three months and 27.38% over the past year. The stock’s fair value estimate rose to $317 per share from $311 during the week. It ended the week trading at a 37% discount to its new fair value estimate, with an Uncertainty Rating of Medium. The large-growth stock has a wide economic moat.

ServiceNow

• Morningstar Rating: ★★★★★
• Fair Value Estimate: $200.00
• Uncertainty Rating: High

Software application firm ServiceNow lost 12.10% over the past week. ServiceNow has dropped 37.41% over the past three months and 42.23% over the past year. The stock’s fair value estimate was cut to $200 per share from $212 during the week. It ended the week trading at a 41% discount to its new fair value estimate, with an Uncertainty Rating of High. ServiceNow is a large-growth company with a wide economic moat.

PayPal Holdings

• Morningstar Rating: ★★★★★
• Fair Value Estimate: $94.00
• Uncertainty Rating: High

Credit services firm PayPal dropped 6.94% over the past week, bumping its Morningstar Rating to 5 stars from 4. The company’s stock is down 22.25% over the past three months and 41.04% over the past year. The stock’s price is 44% below its fair value estimate of $94 per share, with an Uncertainty Rating of High. The mid-core stock has a narrow economic moat.

Fidelity National Information Services

• Morningstar Rating: ★★★★★
• Fair Value Estimate: $88.00
• Uncertainty Rating: Medium

Information technology services company Fidelity lost 8.68% over the past week, shifting its Morningstar Rating to 5 stars from 4. Fidelity has dropped 10.90% over the past three months and 31.13% over the past year. The stock is trading at a 37% discount to its fair value estimate of $88 per share, with an Uncertainty Rating of Medium. Fidelity is a mid-value company with a narrow economic moat.

Elastic

• Morningstar Rating: ★★★★★
• Fair Value Estimate: $119.00
• Uncertainty Rating: High

Following a 8.15% loss over the past week, software application firm Elastic saw its Morningstar Rating move to 5 stars from 4. Elastic has lost 25.41% over the past three months and 40.39% over the past year. The small-growth stock has a narrow economic moat. Elastic is trading at a 45% discount to its fair value estimate of $119 per share, with an Uncertainty Rating of High.