16 New 4-Star Stocks

For the week ended Nov. 1, a total of 16 stocks dropped into undervalued territory, meaning their Morningstar Ratings changed to 4 or 5 stars. Stocks rated 3 stars are fairly valued, while those rated 1 or 2 stars are considered overvalued.

The 10 newly undervalued stocks with the largest market capitalization are:

• Thermo Fisher Scientific TMO
• Mondelez International MDLZ
• Northrop Grumman NOC
• Merck MKKGY
• General Mills GIS
• Li Auto LI
• Equity Residential EQR
• SBA Communications SBAC
• Teradyne TER
• Amcor AMCR

All data in this article is sourced from Morningstar Direct.

New 4-Star Stocks for the Week Ended Nov. 1

The Morningstar US Market Index fell 1.17% over the week, leaving the overall US stock market moderately overvalued, hovering at a 6% premium to its fair value estimate on a cap-weighted basis.

Of the 888 US-listed stocks covered by Morningstar analysts:

• 32% are undervalued, 43% are fairly valued, and 25% are overvalued.
• 16 are newly undervalued.
• Four are newly overvalued.
• Nine moved from a 4-star rating to a 5-star rating.
• Three moved from a 5-star rating to a 4-star rating.
• 12 are no longer undervalued.

Morningstar analysts assign every stock under their coverage a fair value estimate (an intrinsic measure of its 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 fair prices. These two metrics and the stock’s price determine its Morningstar Rating.

Metrics for this Week’s New 4-Star Stocks

Thermo Fisher Scientific TMO

• Morningstar Rating: 4 stars
• One-Week Return: 0.64%

Diagnostics and research firm Thermo Fisher has lost 10.21% over the past three months and gained 26.82% over the past year. The large-core stock has a wide moat. Thermo Fisher is trading at an 11% discount to its fair value estimate of $630, with an Uncertainty Rating of Medium.

Mondelez International MDLZ

• Morningstar Rating: 4 stars
• One-Week Return: -1.04%

Confectioner Mondelez is up 0.93% over the past three months and 5.10% over the past year. The stock’s price is 9% below its fair value estimate of $75, with an Uncertainty Rating of Low. The large-value stock has a wide moat.

Northrop Grumman NOC

• Morningstar Rating: 4 stars
• One-Week Return: -2.39%

Aerospace and defense company Northrop Grumman has climbed 3.16% over the past three months and 10.05% over the past year. The stock trades at a 13% discount to its fair value estimate of $580, with an Uncertainty Rating of Medium. Northrop Grumman is a large core company with a wide moat.

Merck MKKGY

• Morningstar Rating: 4 stars
• One-Week Return: -0.54%

Drug manufacturer Merck is down 7.86% over the past three months and up 11.88% over the past year. The stock’s price is 12% below its fair value estimate of $38, with an Uncertainty Rating of Medium. The large-core stock has a narrow moat.

General Mills GIS

• Morningstar Rating: 4 stars
• One-Week Return: -0.09%

Packaged foods company General Mills has climbed 1.69% over the past three months and 8.60% over the past year. The stock trades at an 8% discount to its fair value estimate of $74, with an Uncertainty Rating of Low. General Mills is a mid-value company with a narrow moat.

Li Auto LI

• Morningstar Rating: 4 stars
• One-Week Return: -12.96%

Auto manufacturer Li is up 29.38% over the past three months and down 28.38% over the past year. The fair value estimate for Li rose to $33.70 from $32.80 during the week. It ended the week trading at a 26% discount to its new fair value estimate, with an Uncertainty Rating of Very High. The large-growth stock has no moat.

Equity Residential EQR

• Morningstar Rating: 4 stars
• One-Week Return: -7.43%

Residential REIT Equity has lost 1.32% over the past three months and gained 35.30% over the past year. The mid-core stock has no moat. Equity Residential trades at a 14% discount to its fair value estimate of $80, with an Uncertainty Rating of Medium.

SBA Communications SBAC

• Morningstar Rating: 4 stars
• One-Week Return: -6.70%

Specialty REIT SBA has dropped 0.25% over the past three months and climbed 10.56% over the past year. Its fair value estimate rose to $265 per share from $260 during the week. It ended the week trading at a 15% discount to its new fair value estimate, with an Uncertainty Rating of Medium. SBA is a mid-growth company with a narrow moat.

Teradyne TER

• Morningstar Rating: 4 stars
• One-Week Return: -4.71%

Semiconductor equipment and materials firm Teradyne has lost 12.44% over the past three months and gained 29.21% over the past year. The mid-core stock has a wide moat. Teradyne trades at a 21% discount to its fair value estimate of $135, with an Uncertainty Rating of High.

Amcor AMCR

• Morningstar Rating: 4 stars
• One-Week Return: -6.73%

Packaging and containers company Amcor has dropped 1.18% over the past three months and climbed 23.94% over the past year. The stock is trading at a 13% discount to its fair value estimate of $11.80, with an Uncertainty Rating of Medium. Amcor is a large-value company with a narrow moat.