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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
. For the week ended April 10, 13 stocks saw their ratings change to 4 stars, while five joined the 78 US-listed names in 5-star territory
The five new 4-star stocks with the largest market capitalization are:
- Verizon Communications VZ
- Intuit INTU
- Automatic Data Processing ADP
- Cadence Design Systems CDNS
- Cloudflare NET
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.
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 3.50% over the past week as of April 10, leaving the overall US stock market moderately undervalued, hovering at a 9% discount to its fair value estimate on a market cap-weighted basis.
Of the 829 US-listed stocks covered by Morningstar analysts:
- 42% are undervalued, 38% are fairly valued, and 20% are overvalued.
- 13 are newly undervalued.
- 31 are newly overvalued.
- Five moved from a 4-star rating to a 5-star rating.
- Seven 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.
- 24 are no longer undervalued.
Metrics for This Week’s New 4-Star Stocks
Verizon Communications VZ
- Morningstar Rating: ★★★★
- Fair Value Estimate: $53
- Uncertainty Rating: Medium
Following a 5.37% loss over the past week, telecom services firm Verizon Communications saw its Morningstar Rating move to 4 stars from 3. Verizon Communications has gained 17.54% over the past three months and 14.54% over the past year. The large-value stock has a narrow economic moat. Verizon Communications is trading at a 13% discount to its fair value estimate of $53, with an Uncertainty Rating of Medium.
Intuit INTU
- Morningstar Rating: ★★★★
- Fair Value Estimate: $495
- Uncertainty Rating: High
Software application firm Intuit dropped 16.66% over the past week, bumping its Morningstar Rating to 4 stars from 3. The company’s stock is down 45.57% over the past three months and 38.71% over the past year. The stock’s price is 29% below its fair value estimate of $495, with an Uncertainty Rating of High. The large-core stock has a narrow economic moat.
Automatic Data Processing ADP
- Morningstar Rating: ★★★★
- Fair Value Estimate: $231
- Uncertainty Rating: Medium
Following a 7.46% loss over the past week, software application firm Automatic Data Processing saw its Morningstar Rating move to 4 stars from 3. Automatic Data Processing has lost 28.45% over the past three months and 33.77% over the past year. The large-value stock has a narrow economic moat. Automatic Data Processing is trading at an 18% discount to its fair value estimate of $231, with an Uncertainty Rating of Medium.
Cadence Design Systems CDNS
- Morningstar Rating: ★★★★
- Fair Value Estimate: $330
- Uncertainty Rating: High
Software application firm Cadence Design Systems dropped 4.69% over the past week, bumping its Morningstar Rating to 4 stars from 3. The company’s stock is down 18.84% over the past three months and is up 4.58% over the past year. The stock’s price is 19% below its fair value estimate of $330, with an Uncertainty Rating of High. The mid-growth stock has a wide economic moat.
Cloudflare NET
- Morningstar Rating: ★★★★
- Fair Value Estimate: $235
- Uncertainty Rating: Very High
Software infrastructure firm Cloudflare lost 21.12% over the past week, shifting its Morningstar Rating to 4 stars from 3. Cloudflare has dropped 8.64% over the past three months and has climbed 58.28% over the past year. The stock is trading at a 29% discount to its fair value estimate of $235, with an Uncertainty Rating of Very High. Cloudflare is a mid-growth company with a wide economic moat.
This article was generated with the help of automation and reviewed by Morningstar editors.
Learn more about Morningstar’s use of automation.
