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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 Aug. 7, 21 stocks saw their ratings change to 4 stars, while one additional stock joined the 51 US-listed names in 5-star territory.
The one new 5-star stock is:
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 Total Market Index rose 3.70% over the past week as of Aug. 7, leaving the overall US stock market moderately undervalued, hovering at a 5% discount to its fair value estimate on a market cap-weighted basis.
Of the 879 US-listed stocks covered by Morningstar analysts:
- 34% are undervalued, 42% are fairly valued, and 23% are overvalued.
- 21 are newly undervalued.
- 28 are newly overvalued.
- One moved from a 4-star rating to a 5-star rating.
- 13 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.
- 20 are no longer undervalued.
Metrics for This Week’s New 5-Star Stock
Honeywell Aerospace HONA
- Morningstar Rating: ★★★★★
- Fair Value Estimate: $256
- Uncertainty Rating: Medium
Aerospace and defense company Honeywell Aerospace dropped 18.49% over the past week. The stock’s fair value estimate was cut to $256 from $285 during the week. It ended the week trading at a 34% discount to its new fair value estimate, with an Uncertainty Rating of Medium. The mid-core stock has 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.
