New 5-Star Stocks
Choice Hotels fell into 5-star territory.
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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 Morningstar Ratings. For the week ended Dec. 5, one stock joined the 54 US-listed names in 5-star territory.
The one new 5-star stock is:
- Choice Hotels International CHH
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 fair value estimate—Morningstar’s estimate of its intrinsic worth—and its Uncertainty Rating, 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 0.38% over the past week as of Dec. 5, leaving the overall US stock market slightly overvalued, hovering at a 2.00% premium to its fair value estimate on a market cap-weighted basis.
Of the 830 US-listed stocks covered by Morningstar analysts:
- 38% are undervalued, 40% are fairly valued, and 22% are overvalued.
- Seven are newly undervalued.
- 15 are newly overvalued.
- One moved from a 4-star rating to a 5-star rating.
- Eight 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.
- 19 are no longer undervalued.
Metrics for This Week’s New 5-Star Stock
Choice Hotels International
Lodging company Choice Hotels dropped 6.03% over the past week, bumping its Morningstar Rating to 5 stars from 4. The company’s stock is down 26.39% over the past three months and 41.92% over the past year. The stock’s price is 33% below its fair value estimate of $128 per share, with an Uncertainty Rating of Medium. The small-core stock has a narrow economic moat.
- Morningstar Rating: ★★★★★
- Fair Value Estimate: $128.00
- Uncertainty Rating: Medium
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.
United States