New 4- and 5-Star Stocks

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

For the week ended Nov. 15, 22 stocks saw their Morningstar Ratings change to 4 stars, while another six 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:

• Taiwan Semiconductor Manufacturing TSM
• PepsiCo PEP
• Danaher DHR
• Newmont NEM
• GE HealthCare Technologies GEHC

The five new 5-star stocks with the largest market capitalization are:

• Tencent Holdings TCEHY
• Nestle NSRGY
• Biogen BIIB
• Vodafone Group VOD
• Caesars Entertainment CZR

The full lists of new 4- and 5-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 Nov. 15

The Morningstar US Market Index fell 2.06% 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 882 US-listed stocks covered by Morningstar analysts:

• 32% are undervalued, 39% are fairly valued, and 28% are overvalued.
• 22 are newly undervalued.
• 17 are newly overvalued.
• Six moved from a 4-star rating to a 5-star rating.
• Four 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.
• 12 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 are used to determine its Morningstar Rating.

Metrics for this Week’s New 4-Star Stocks

Taiwan Semiconductor Manufacturing

• Morningstar Rating: 4 stars
• One-Week Return: -7.55%

Chip manufacturer Taiwan Semiconductor has gained 7.32% over the past three months and 91.19% over the past year. The large-growth stock has a wide moat. Taiwan Semiconductor is trading at a 13% discount to its fair value estimate of $215, with an Uncertainty Rating of Medium.

Pepsico

• Morningstar Rating: 4 stars
• One-Week Return: -3.93%

Non-alcoholic beverages company Pepsico is down 7.35% over the past three months and 2.21% over the past year. The stock’s price is 9% below its fair value estimate of $174, with an Uncertainty Rating of Low. The large-value stock has a wide moat.

Danaher

• Morningstar Rating: 4 stars
• One-Week Return: -6.07%

Diagnostics and research firm Danaher has lost 14.33% over the past three months and gained 11.20% over the past year. The large-core stock has a narrow moat. Danaher is trading at a 14% discount to its fair value estimate of $268, with an Uncertainty Rating of Medium.

Newmont

• Morningstar Rating: 4 stars
• One-Week Return: -9.13%

Gold company Newmont has dropped 16.59% over the past three months and climbed 15.76% over the past year. The stock trades at an 18% discount to its fair value estimate of $50, with an Uncertainty Rating of Medium. Newmont is a mid-value company with no moat.

GE HealthCare Technologies

• Morningstar Rating: 4 stars
• One-Week Return: -4.86%

Health information services firm GE HealthCare is down 4.12% over the past three months and up 14.48% over the past year. The stock’s price is 17% below its fair value estimate of $98, with an Uncertainty Rating of Medium. The mid-core stock has a wide moat.

Metrics for this Week’s New 5-Star Stocks

Tencent Holdings

• Morningstar Rating: 5 stars
• One-Week Return: -2.86%

Internet content company Tencent is up 8.46% over the past three months and 21.70% over the past year. The stock’s price is 43% below its fair value estimate of $90, with an Uncertainty Rating of High. The large-growth stock has a wide moat.

Nestle

• Morningstar Rating: 5 stars
• One-Week Return: -3.65%

Packaged foods company Nestle has dropped 14.83% over the past three months and 19.51% over the past year. The stock trades at a 25% discount to its fair value estimate of $116, with an Uncertainty Rating of Low. Nestle is a large-core company with a wide moat.

Biogen

• Morningstar Rating: 5 stars
• One-Week Return: -7.54%

Drug manufacturer Biogen is down 20.65% over the past three months and 30.33% over the past year. The stock’s price is 47% below its fair value estimate of $303, with an Uncertainty Rating of High. The mid-value stock has a narrow moat.

Vodafone Group

• Morningstar Rating: 5 stars
• One-Week Return: -5.80%

Telecom services firm Vodafone has dropped 8.26% over the past three months and climbed 6.48% over the past year. The fair value estimate for Vodafone was cut to $12.20 from $13.00 during the week. It ended the week trading at a 28% discount to its new fair value estimate, with an Uncertainty Rating of Medium. Vodafone is a large-value company with no moat.

Caesars Entertainment

• Morningstar Rating: 5 stars
• One-Week Return: -9.30%

Travel and leisure company Caesars has lost 0.54% over the past three months and 20.36% over the past year. The small-value stock has no moat. Caesars is trading at a 44% discount to its fair value estimate of $66, with an Uncertainty Rating of High.