8 New 4-Star Stocks
Oracle and Lockheed Martin are among the stocks that fell into undervalued territory.
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Each week, we screen the US-listed stocks under Morningstar’s coverage for newly undervalued names. For the week ended Jan. 31, eight stocks saw their Morningstar Ratings change to 4 stars, while two 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 five new 4-star stocks with the largest market capitalization are:
The two new 5-star stocks, ordered by market cap, are:
The full list of new 4-star stocks can be found at the bottom of this story. 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 Jan. 31
The Morningstar US Market Index fell 0.89% over the past week, leaving the overall US stock market moderately overvalued, hovering at an 8.00% premium to its fair value estimate on a cap-weighted basis.
Of the 858 US-listed stocks covered by Morningstar analysts:
- 34% are undervalued, 38% are fairly valued, and 28% are overvalued.
- Eight are newly undervalued.
- 20 are newly overvalued.
- Two moved from a 4-star rating to a 5-star rating.
- Two 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.
- 20 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.
Distribution of Star Ratings for US-Listed Stocks
Metrics for this Week’s New 4-Star Stocks
Oracle
- Morningstar Rating: 4 stars
- One-Week Return: -7.37%
Software infrastructure firm Oracle is up 1.59% over the past three months and 53.92% over the past year. The stock’s price is 13% below its fair value estimate of $195 per share, and it has an Uncertainty Rating of Medium. The large-core stock has a narrow economic moat.
Lockheed Martin
- Morningstar Rating: 4 stars
- One-Week Return: -6.84%
Aerospace and defense company Lockheed Martin has dropped 14.68% over the past three months and climbed 10.64% over the past year. The fair value estimate for Lockheed Martin rose to $530 per share from $510 during the week. It ended the week trading at a 13% discount to its new fair value estimate, with an Uncertainty Rating of Medium. Lockheed Martin is a large-value company with a wide economic moat.
Occidental Petroleum
- Morningstar Rating: 4 stars
- One-Week Return: -5.36%
Oil and gas exploration and production company Occidental is down 6.48% over the past three months and 17.66% over the past year. The stock’s price is 25% below its fair value estimate of $62 per share, with an Uncertainty Rating of Very High. The mid-value stock has no economic moat.
PG&E
- Morningstar Rating: 4 stars
- One-Week Return: -5.38%
Regulated electric company PG&E has dropped 22.51% over the past three months and 6.96% over the past year. The stock is trading at a 13% discount to its fair value estimate of $18, with an Uncertainty Rating of Medium. PG&E is a mid-value company with no economic moat.
Teva Pharmaceutical Industries
- Morningstar Rating: 4 stars
- One-Week Return: -18.22%
Drug manufacturer Teva has lost 3.85% over the past three months and gained 46.53% over the past year. The large-value stock has no economic moat. The fair value estimate for Teva was cut to $23 per share from $24 during the week. It ended the week trading at a 23% discount to its new fair value estimate, with an Uncertainty Rating of High.
Metrics for this Week’s New 5-Star Stocks
Comcast
- Morningstar Rating: 5 stars
- One-Week Return: -10.53%
Telecom services firm Comcast is down 22.28% over the past three months and 25.38% over the past year. The fair value estimate for Comcast was cut to $49 per share from $54 during the week. It ended the week trading at a 31% discount to its new fair value estimate, with an Uncertainty Rating of Medium. The large-value stock has a narrow economic moat.
Gentex
- Morningstar Rating: 5 stars
- One-Week Return: -6.53%
Auto parts firm Gentex has dropped 14.11% over the past three months and 20.54% over the past year. The stock is trading at a 35% discount to its fair value estimate of $40 per share, with an Uncertainty Rating of Medium. Gentex is a small-core company with a narrow economic moat.
This article was generated with the help of automation and reviewed by Morningstar editors. Learn more about Morningstar’s use of automation.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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