11 Newly Overvalued Stocks This Week

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Once a week, we screen the US-listed stocks under Morningstar’s coverage for newly overvalued names—those whose prices have just climbed into ranges warranting 1- or 2-star Morningstar Ratings. For the week ended Oct. 16, 11 stocks saw their ratings change to 2 stars, while three joined the 29 US-listed names in 1-star territory.

The five new 2-star stocks with the largest market capitalization are:

• Novartis NVS
• Chubb Group Holdings CB
• Canadian Natural Resources CNQ
• Southern Company SO
• HCA Healthcare HCA

The three new 1-star stocks, ordered by market capitalization, are:

• Walmart WMT
• Phillips 66 PSX
• Fortrea Holdings FTRE

The full list of new 2-star stocks is 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 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 Total Market Index fell 2.06% over the past week as of Oct. 16, leaving the overall US stock market moderately undervalued, hovering at an 8% discount to its fair value estimate on a market cap-weighted basis.

Of the 869 US-listed stocks covered by Morningstar analysts:

• 43% are undervalued, 40% are fairly valued, and 17% are overvalued.
• 10 are newly undervalued.
• 11 are newly overvalued.
• Three moved from a 2-star rating to a 1-star rating.
• Three moved from a 1-star rating to a 2-star rating.
• No newly overvalued stocks jumped from a 3-star rating to a 1-star rating.
• 22 are no longer overvalued.

Metrics for This Week’s New 2-Star Stocks

Novartis NVS

• Morningstar Rating: ★★
• Fair Value: $130.00
• Uncertainty Rating: Medium

Drug manufacturer Novartis gained 4.78% over the past week, shifting its Morningstar Rating to 2 stars from 3. Novartis has dropped 1.38% over the past three months and has climbed 18.68% over the past year. The stock is trading at a 16% premium to its fair value estimate of $130 per share, with an Uncertainty Rating of Medium. Novartis is a large-core company with a wide economic moat.

Chubb Group Holdings CB

• Morningstar Rating: ★★
• Fair Value: $314.00
• Uncertainty Rating: Medium

Property and casualty insurance firm Chubb climbed 5.45% over the past week, bumping its Morningstar Rating to 2 stars from 3. The company’s stock is up 5.00% over the past three months and 35.78% over the past year. The stock’s price is 15% above its fair value estimate of $314 per share, with an Uncertainty Rating of Medium. The large-core stock has a narrow economic moat.

Canadian Natural Resources CNQ

• Morningstar Rating: ★★
• Fair Value: $44.00
• Uncertainty Rating: High

Following an 8.36% gain over the past week, oil and gas exploration and production company Canadian Natural saw its Morningstar Rating move to 2 stars from 3. Canadian Natural has gained 26.65% over the past three months and 85.67% over the past year. The large-value stock has a narrow economic moat. Canadian Natural is trading at a 22% premium to its fair value estimate of $44 per share, with an Uncertainty Rating of High.

Southern Company SO

• Morningstar Rating: ★★
• Fair Value: $83.00
• Uncertainty Rating: Low

Regulated electric company Southern gained 5.81% over the past week, shifting its Morningstar Rating to 2 stars from 3. Southern has dropped 4.31% over the past three months and 4.31% over the past year. The stock is trading at a 10% premium to its fair value estimate of $83 per share, with an Uncertainty Rating of Low. Southern is a mid-core company with a narrow economic moat.

HCA Healthcare HCA

• Morningstar Rating: ★★
• Fair Value: $413.00
• Uncertainty Rating: Medium

Medical care facilities firm HCA climbed 1.72% over the past week, bumping its Morningstar Rating to 2 stars from 3. The company’s stock is up 19.17% over the past three months and 10.10% over the past year. The stock’s price is 11% above its fair value estimate of $413 per share, with an Uncertainty Rating of Medium. The mid-core stock has a narrow economic moat.

Metrics for This Week’s New 1-Star Stocks

Walmart WMT

• Morningstar Rating: ★
• Fair Value: $81.00
• Uncertainty Rating: Medium

Discount store Walmart climbed 6.70% over the past week, bumping its Morningstar Rating to 1 star from 2. The company’s stock is up 3.60% over the past three months and 12.53% over the past year. The stock’s price is 47% above its fair value estimate of $81 per share, with an Uncertainty Rating of Medium. The large-core stock has a wide economic moat.

Phillips 66 PSX

• Morningstar Rating: ★
• Fair Value: $188.00
• Uncertainty Rating: High

Following a 5.39% gain over the past week, oil and gas company Phillips saw its Morningstar Rating move to 1 star from 2. Phillips has gained 46.38% over the past three months and 135.15% over the past year. The large-value stock has a narrow economic moat. Phillips is trading at a 56% premium to its fair value estimate of $188 per share, with an Uncertainty Rating of High.

Fortrea Holdings FTRE

• Morningstar Rating: ★
• Fair Value: $13.50
• Uncertainty Rating: High

Biotechnology firm Fortrea climbed 7.92% over the past week, bumping its Morningstar Rating to 1 star from 2. The company’s stock is up 25.50% over the past three months and 136.24% over the past year. The stock’s price is 67% above its fair value estimate of $13.50 per share, with an Uncertainty Rating of High. The small-growth stock has a narrow economic moat.