3 Newly Overvalued Stocks This Week

Every Monday morning, get Morningstar’s insights on company news, the latest stock market trends, and in-depth company reports from our analysts. Sign up for our Stock Strategist newsletter here.

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

. For the week ended Oct. 2, three stocks saw their ratings change to 2 stars, while four joined the 26 US-listed names in 1-star territory.

The three new 2-star stocks, ordered by market capitalization, are:

• KLA KLAC
• Teradyne TER
• HF Sinclair DINO

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

• Marathon Petroleum MPC
• Rockwell Automation ROK
• Wesco International WCC
• Shake Shack SHAK

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 fell 0.24% over the past week as of Oct. 2, leaving the overall US stock market moderately undervalued, hovering at a 7.00% discount to its fair value estimate on a market cap-weighted basis.

Of the 868 US-listed stocks covered by Morningstar analysts:

• 46% are undervalued, 36% are fairly valued, and 18% are overvalued.
• 26 are newly undervalued.
• Three are newly overvalued.
• Four moved from a 2-star rating to a 1-star rating.
• Three moved from a 1-star rating to a 2-star rating.
• None of the newly overvalued stocks jumped from a 3-star rating to a 1-star rating.
• Eight are no longer overvalued.

Metrics for This Week’s New 2-Star Stocks

KLA KLAC

• Morningstar Rating: ★★
• Fair Value Estimate: $175.00
• Uncertainty Rating: High

Semiconductor equipment and materials firm KLA gained 10.09% over the past week, shifting its Morningstar Rating to 2 stars from 3. KLA has dropped 12.07% over the past three months and has climbed 82.58% over the past year. The stock is trading at an 18% premium to its fair value estimate of $175 per share, with an Uncertainty Rating of High. KLA is a large-growth company with a wide economic moat.

Teradyne TER

• Morningstar Rating: ★★
• Fair Value Estimate: $350.00
• Uncertainty Rating: High

Semiconductor equipment and materials firm Teradyne climbed 12.72% over the past week, bumping its Morningstar Rating to 2 stars from 3. The company’s stock is up 21.71% over the past three months and 211.28% over the past year. The stock’s price is 28% above its fair value estimate of $350 per share, with an Uncertainty Rating of High. The mid-growth stock has a wide economic moat.

HF Sinclair DINO

• Morningstar Rating: ★★
• Fair Value Estimate: $87.00
• Uncertainty Rating: Very High

Following a 6.12% gain over the past week, oil and gas company HF Sinclair saw its Morningstar Rating move to 2 stars from 3. HF Sinclair has gained 57.32% over the past three months and 125.65% over the past year. The mid-core stock has a narrow economic moat. HF Sinclair is trading at a 30% premium to its fair value estimate of $87 per share, with an Uncertainty Rating of Very High.

Metrics for This Week’s New 1-Star Stocks

Marathon Petroleum MPC

• Morningstar Rating: ★
• Fair Value Estimate: $236.00
• Uncertainty Rating: Very High

Oil and gas company Marathon gained 7.32% over the past week, shifting its Morningstar Rating to 1 star from 2. Marathon has climbed 59.00% over the past three months and 123.40% over the past year. The stock is trading at a 79% premium to its fair value estimate of $236 per share, with an Uncertainty Rating of Very High. Marathon is a large-value company with a narrow economic moat.

Rockwell Automation ROK

• Morningstar Rating: ★
• Fair Value Estimate: $282.00
• Uncertainty Rating: High

Specialty industrial machinery firm Rockwell climbed 4.65% over the past week, bumping its Morningstar Rating to 1 star from 2. The company’s stock is down 3.38% over the past three months and is up 32.08% over the past year. The stock’s price is 61% above its fair value estimate of $282, with an Uncertainty Rating of High. The mid-core stock has a wide economic moat.

Wesco International WCC

• Morningstar Rating: ★
• Fair Value Estimate: $275
• Uncertainty Rating: Medium

Following a 3.89% gain over the past week, industrial distributor Wesco saw its Morningstar Rating move to 1 star from 2. Wesco has gained 24.16% over the past three months and 79.64% over the past year. The mid-core stock has a narrow economic moat. Wesco is trading at a 39% premium to its fair value estimate of $275 per share, with an Uncertainty Rating of Medium.

Shake Shack SHAK

• Morningstar Rating: ★
• Fair Value Estimate: $34.00
• Uncertainty Rating: Very High

Restaurant Shake Shack climbed 9.77% over the past week, bumping its Morningstar Rating to 1 star from 2. The company’s stock is up 7.99% over the past three months and is down 35.51% over the past year. The stock’s price is 79% above its fair value estimate of $34 per share, with an Uncertainty Rating of Very High. The small-growth stock has no economic moat.