For the week ended Oct. 18, seven stocks dropped into undervalued territory, meaning their Morningstar Ratings changed to 4 or 5 stars. Stocks rated 3 stars are fairly valued according to Morningstar analysts, while those rated 1 or 2 stars are considered overvalued. The seven newly undervalued stocks, ordered by market cap, are:
All data in this article is sourced from Morningstar Direct.
The Morningstar US Market Index rose 0.91% over the past week, leaving the overall US stock market significantly overvalued, hovering at a 10% premium to its fair value estimate on a cap-weighted basis.
Of the 888 US-listed stocks covered by Morningstar analysts:
30% are undervalued, 42% are fairly valued, and 28% are overvalued.
Seven are newly undervalued.
20 are newly overvalued.
Zero moved from a 4-star rating to a 5-star rating.
Two moved from a 5-star rating to a 4-star rating.
10 are no longer undervalued.
Metrics for this Week’s New 4-Star Stocks，New 4-Star Stocks for the Week Ended Oct. 18：
Elevance Health
Morningstar Rating: 4 stars
One-Week Return: -14.17%
Healthcare plans company Elevance has lost 14.40% over the past three months and 7.07% over the past year. The large-value stock has a narrow economic moat. Elevance is trading at a 22% discount to its fair value estimate of $550, with a medium uncertainty rating.
JD.com
Morningstar Rating: 4 stars
One-Week Return: -8.78%
Internet retail company JD has climbed 52.13% over the past three months and 58.98% over the past year. The stock is trading at a 20% discount to its fair value estimate of $50, with a high uncertainty rating. JD is a large-core company with a wide economic moat.
Honda Motor
Morningstar Rating: 4 stars
One-Week Return: -2.30%
Auto manufacturer Honda is down 2.79% over the past three months and 4.51% over the past year. The stock’s price is 19% below its fair value estimate of $38, with a high uncertainty rating. The large-value stock has no economic moat.
Li Auto
Morningstar Rating: 4 stars
One-Week Return: -6.65%
Auto manufacturer Li has gained 25.62% over the past three months and lost 22.90% over the past year. The large-growth stock has no economic moat. Li is trading at a 23% discount to its fair value estimate of $32.80, with a very high uncertainty rating.
Smurfit WestRock
Morningstar Rating: 4 stars
One-Week Return: -2.74%
Packaging and containers company Smurfit WestRock has dropped 4.61% over the past three months and climbed 37.07% over the past year. The stock is trading at a 19% discount to its fair value estimate of $55, with a high uncertainty rating. Smurfit WestRock is a large-value company with no economic moat.
Nio
Morningstar Rating: 4 stars
One-Week Return: -16.35%
Auto manufacturer Nio is up 14.98% over the past three months and down 34.01% over the past year. The stock’s price is 31% below its fair value estimate of $7.60, with a very high uncertainty rating. The large-value stock has no economic moat.
Bio-Techne
Morningstar Rating: 4 stars
One-Week Return: -2.89%
Biotechnology firm Bio-Techne has lost 6.06% over the past three months and gained 7.93% over the past year. The mid-core stock has a narrow economic moat. Bio-Techne is trading at an 18% discount to its fair value estimate of $87, with a high uncertainty rating.