13 Newly Overvalued Stocks for the Week

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Each week, we screen the US-listed stocks under Morningstar’s coverage for newly overvalued names.

For the week ended Dec. 6, 13 stocks saw their Morningstar Ratings change to 2 stars, while another four climbed into 1-star territory. Stocks rated 3 stars are fairly valued according to Morningstar analysts, while those rated 4 or 5 stars are considered undervalued.

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

• Amazon.com AMZN
• Broadcom AVGO
• ABB ABBNY
• KDDI KDDIY
• Datadog DDOG

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

• Tesla TSLA
• Royal Caribbean Cruises RCL
• Hilton Worldwide Holdings HLT
• Fastly FSLY

The full list of new 2-star stocks can be found at the bottom of this story.

Newly Overvalued Stocks for the Week Ended Dec. 6

The Morningstar US Market Index rose 0.97% over the past week, leaving the overall US stock market moderately overvalued, hovering at a 6.9% premium to its fair value estimate on a cap-weighted basis.

Of the 878 US-listed stocks covered by Morningstar analysts:

• 31% are undervalued, 38% are fairly valued, and 31% are overvalued.
• 13 are newly overvalued.
• Eight are newly undervalued.
• Four moved from a 2-star rating to a 1-star rating.
• Among the newly overvalued stocks, none fell from a 3-star rating to a 1-star rating.
• 13 are no longer overvalued.

Morningstar analysts assign every stock under their coverage a fair value estimate, which is an intrinsic measure of the stock’s worth, and an Uncertainty Rating, which captures the range of potential outcomes for that estimate. A higher Uncertainty Rating equates to a larger range of prices considered fairly valued. These two metrics and the stock’s current price determine its Morningstar Rating.

Metrics for this Week’s New 2-Star Stocks

Amazon.com

• Morningstar Rating: 2 stars
• One-Week Return: 9.21%

Internet retail company Amazon has gained 32.46% over the past three months and 57.09% over the past year. The large-core stock has a wide moat. Amazon is trading at a 14% premium to its fair value estimate of $200 per share, with an Uncertainty Rating of Medium.

Broadcom

• Morningstar Rating: 2 stars
• One-Week Return: 10.77%

Semiconductor company Broadcom is up 31.46% over the past three months and 101.71% over the past year. The stock’s price is 16% above its fair value estimate of $155 per share, with an Uncertainty Rating of Medium. The large-growth stock has a wide moat.

ABB

• Morningstar Rating: 2 stars
• One-Week Return: 3.42%

Electrical equipment and parts company ABB has gained 9.94% over the past three months and 49.31% over the past year. The large-growth stock has a wide moat. ABB is trading at a 14% premium to its fair value estimate of $52 per share, with an Uncertainty Rating of Medium.

KDDI

• Morningstar Rating: 2 stars
• One-Week Return: 1.70%

Telecom services firm KDDI is up 0.93% over the past three months and 9.91% over the past year. The stock’s price is 10% above its fair value estimate of $15.30 per share, with an Uncertainty Rating of Low. The large-core stock has a narrow moat.

Datadog

• Morningstar Rating: 2 stars
• One-Week Return: 10.41%

Software application firm Datadog has gained 57.32% over the past three months and 47.54% over the past year. The mid-growth stock has a narrow moat. Datadog is trading at a 30% premium to its fair value estimate of $130, with an Uncertainty Rating of Very High.

Metrics for this Week’s New 1-Star Stocks

Tesla

• Morningstar Rating: 1 star
• One-Week Return: 12.77%

Auto manufacturer Tesla has gained 84.70% over the past three months and 62.60% over the past year. The large-growth stock has a narrow moat. Tesla is trading at an 85% premium to its fair value estimate of $210 per share, with an Uncertainty Rating of Very High.

Royal Caribbean Cruises

• Morningstar Rating: 1 star
• One-Week Return: 5.75%

Travel services company Royal Caribbean has climbed 65.24% over the past three months and 118.91% over the past year. The stock is trading at a 67% premium to its fair value estimate of $155 per share, with an Uncertainty Rating of High. Royal Caribbean is a mid-growth company with a narrow moat.

Hilton Worldwide Holdings

• Morningstar Rating: 1 star
• One-Week Return: 1.98%

Lodging company Hilton is up 21.36% over the past three months and 54.22% over the past year. The stock’s price is 40% above its fair value estimate of $185 per share, with an Uncertainty Rating of Medium. The mid-growth stock has a wide moat.

Fastly

• Morningstar Rating: 1 star
• One-Week Return: 28.54%

Software application firm Fastly has gained 92.92% over the past three months and lost 35.69% over the past year. The small-growth stock has no moat. Fastly is trading at a 118% premium to its fair value estimate of $5 per share, with an Uncertainty Rating of Very High.