24 Newly Overvalued Stocks

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Each week, we screen the US-listed stocks under Morningstar’s coverage for newly overvalued names. For the week ended Jan. 24, 24 stocks saw their Morningstar Ratings change to 2 stars, while another 11 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:

• Visa V
• Abbott ABT
• Union Pacific UNP
• Blackstone BX
• Starbucks SBUX

The five new 1-star stocks with the largest market capitalization are:

• American Express AXP
• Kinder Morgan KMI
• Adidas ADDYY
• Corning GLW
• Entergy ETR

The full lists of new 1- and 2-star stocks are at the bottom of this story. All returns are reported in the stock’s base currency, and all data is sourced from Morningstar Direct.

Newly Overvalued Stocks for the Week Ended Jan. 24

The Morningstar US Market Index rose 1.73% over the past week, leaving the overall US stock market significantly overvalued, hovering at an 11% premium to its fair value estimate on a cap-weighted basis.

Of the 858 US-listed stocks covered by Morningstar analysts:

• 35% are undervalued, 37% are fairly valued, and 28% are overvalued
• 24 are newly overvalued
• Six are newly undervalued
• 11 moved from a 2-star rating to a 1-star rating
• None of the newly overvalued stocks jumped from a 3-star rating to a 1-star rating
• Two 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

Visa

• Morningstar Rating: ★★
• One-Week Return: 3.31%

Credit services firm Visa has gained 16.81% over the past three months and 22.49% over the past year. The large-core stock has a wide moat. Visa is trading at a 14% premium to its fair value estimate of $289 per share, with an Uncertainty Rating of Medium.

Abbott

• Morningstar Rating: ★★
• One-Week Return: 10.18%

Medical device company Abbott has climbed 7.85% over the past three months and 15.20% over the past year. The stock trades at a 15% premium to its fair value estimate of $109 per share, with an Uncertainty Rating of Medium. Abbott is a large-value company with a narrow moat.

Union Pacific

• Morningstar Rating: ★★
• One-Week Return: 6.20%

Railroad Union Pacific has gained 8.43% over the past three months and 4.90% over the past year. The large-value stock has a wide economic moat. The fair value estimate for Union Pacific rose to $220 per share from $218 during the week. It ended the week trading at a 13% premium to its new fair value estimate, with an Uncertainty Rating of Medium.

Blackstone

• Morningstar Rating: ★★
• One-Week Return: 3.77%

Asset management firm Blackstone is up 10.62% over the past three months and 58.74% over the past year. The stock’s price is 20% above its fair value estimate of $155 per share, with an Uncertainty Rating of High. The large-core stock has a narrow economic moat.

Starbucks

• Morningstar Rating: ★★
• One-Week Return: 3.87%

Starbucks has climbed 2.34% over the past three months and 10.14% over the past year. The stock trades at a 15% premium to its fair value estimate of $86 per share, with an Uncertainty Rating of Medium. Starbucks is a large-value company with a wide economic moat.

Metrics for this Week’s New 1-Star Stocks

American Express

• Morningstar Rating: ★
• One-Week Return: 2.81%

Credit services firm American Express is up 19.30% over the past three months and 74.84% over the past year. The stock’s price is 40% above its fair value estimate of $230 per share, with an Uncertainty Rating of Medium. The large-core stock has a wide moat.

Kinder Morgan

• Morningstar Rating: ★
• One-Week Return: -0.13%

Midstream oil and gas company Kinder Morgan has climbed 22.55% over the past three months and 89.69% over the past year. The stock trades at a 38% premium to its fair value estimate of $22, with an Uncertainty Rating of Medium. Kinder Morgan is a mid-value company with a narrow moat.

Adidas

• Morningstar Rating: ★
• One-Week Return: 7.39%

Athletic apparel firm Adidas has gained 13.98% over the past three months and 48.47% over the past year. The large-growth stock has a narrow moat. The fair value estimate for Adidas rose to $94 per share from $93 during the week. It ended the week trading at a 42% premium to its new fair value estimate, with an Uncertainty Rating of Medium.

Corning

• Morningstar Rating: ★
• One-Week Return: 8.85%

Electronic components company Corning is up 16.59% over the past three months and 83.86% over the past year. The stock’s price is 47% above its fair value estimate of $37 per share, with an Uncertainty Rating of Medium. The mid-core stock has a narrow moat.

Entergy

• Morningstar Rating: ★
• One-Week Return: 0.65%

Regulated electric company Entergy has gained 21.03% over the past three months and 76.68% over the past year. The mid-core stock has a narrow moat. Entergy is trading at a 27% premium to its fair value estimate of $65 per share, with an Uncertainty Rating of Low.