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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. 14, nine stocks saw their ratings change to 4 stars, while one additional stock joined the 46 US-listed names in 5-star territory
The five new 4-star stocks with the largest market capitalization are:
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 Total Market Index rose 0.51% over the past week as of Aug. 14, leaving the overall US stock market slightly 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:
- 29% are undervalued, 38% are fairly valued, and 21% are overvalued.
- Nine are newly undervalued.
- Nine are newly overvalued.
- One moved from a 4-star rating to a 5-star rating.
- Two 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.
- 16 are no longer undervalued.
Metrics for This Week’s New 4-Star Stocks
MercadoLibre MELI
- Morningstar Rating: ★★★★
- Fair Value Estimate: $2,250
- Uncertainty Rating: High
Internet retail company MercadoLibre gained 1.31% over the past week. MercadoLibre has climbed 14.76% over the past three months and has dropped 20.49% over the past year. The stock’s fair value estimate rose to $2,250 from $2,150 during the week. It ended the week trading at an 18% discount to its new fair value estimate, with an Uncertainty Rating of High. MercadoLibre is a large-growth company with a wide economic moat.
Merck MKKGY
- Morningstar Rating: ★★★★
- Fair Value Estimate: $36.40
- Uncertainty Rating: Medium
Drug manufacturer Merck dropped 5.39% over the past week, bumping its Morningstar Rating to 4 stars from 3. The company’s stock is up 12.46% over the past three months and 24.71% over the past year. The stock’s price is 13% below its fair value estimate of $36.40, with an Uncertainty Rating of Medium. The large-core stock has a narrow economic moat.
JD.com JD
- Morningstar Rating: ★★★★
- Fair Value Estimate: $36
- Uncertainty Rating: High
Following a 11.86% loss over the past week, internet retail company JD.com saw its Morningstar Rating move to 4 stars from 3. JD.com has lost 11.56% over the past three months and 4.73% over the past year. The large-value stock has a narrow economic moat. JD.com is trading at a 19% discount to its fair value estimate of $36, with an Uncertainty Rating of High.
WEC Energy Group WEC
- Morningstar Rating: ★★★★
- Fair Value Estimate: $116
- Uncertainty Rating: Low
Regulated electric company WEC Energy Group climbed 3.57% over the past week, bumping its Morningstar Rating to 4 stars from 3. The company’s stock is down 0.15% over the past three months and is up 5.67% over the past year. The stock’s price is near its fair value estimate of $116, with an Uncertainty Rating of Low. The mid-core stock has a narrow economic moat.
Baidu BIDU
- Morningstar Rating: ★★★★
- Fair Value Estimate: $128
- Uncertainty Rating: High
Internet content company Baidu lost 5.51% over the past week, shifting its Morningstar Rating to 4 stars from 3. Baidu has dropped 27.65% over the past three months and has climbed 16.84% over the past year. The stock is trading at a 19% discount to its fair value estimate of $128, with an Uncertainty Rating of High. Baidu is a large-core company with no economic moat.
This article was generated with the help of automation and reviewed by Morningstar editors.
Learn more about Morningstar’s use of automation.
