25 New 4-Star Stocks This Week

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Once a week, we screen the US-listed stocks under Morningstar’s coverage for newly undervalued names—those whose prices have just fallen into ranges worthy of 4- or 5-star

. For the week ended May 8, 25 stocks saw their ratings change to 4 stars, while nine joined the 78 US-listed names in 5-star territory.

The five new 4-star stocks with the largest market capitalization are:

• Wells Fargo WFC
• IBM IBM
• McDonald’s MCD
• Arista Networks ANET
• GSK GSK

The full list of new 4-star stocks can be found 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

—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 Market Index rose 2.20% over the past week as of May 8, leaving the overall US stock market moderately undervalued, hovering at a 5% discount to its fair value estimate on a market cap-weighted basis.

Of the 871 US-listed stocks covered by Morningstar analysts:

• 38% are undervalued, 41% are fairly valued, and 21% are overvalued.
• 25 are newly undervalued.
• 18 are newly overvalued.
• Nine moved from a 4-star rating to a 5-star rating.
• Four moved from a 5-star rating to a 4-star rating.
• Among the newly undervalued stocks, zero jumped from a 3-star rating to a 5-star rating.
• 20 are no longer undervalued.

Metrics for This Week’s New 4-Star Stocks

Wells Fargo WFC

• Morningstar Rating: ★★★★
• Fair Value Estimate: $88
• Uncertainty Rating: Medium

Following a 5.84% loss over the past week, diversified bank Wells Fargo saw its Morningstar Rating move to 4 stars from 3. Wells Fargo has lost 19.03% over the past three months and has gained 6.02% over the past year. The large-value stock has a wide economic moat. Wells Fargo is trading at a 14% discount to its fair value estimate of $88, with an Uncertainty Rating of Medium.

IBM IBM

• Morningstar Rating: ★★★★
• Fair Value Estimate: $260
• Uncertainty Rating: Medium

Information technology services company IBM lost 0.32% over the past week, shifting its Morningstar Rating to 4 stars from 3. IBM has dropped 22.13% over the past three months and 6.64% over the past year. The stock is trading at a 12% discount to its fair value estimate of $260, with an Uncertainty Rating of Medium. IBM is a large-value company with a narrow economic moat.

McDonald’s MCD

• Morningstar Rating: ★★★★
• Fair Value Estimate: $300
• Uncertainty Rating: Low

Following a 3.80% loss over the past week, restaurant McDonald’s saw its Morningstar Rating move to 4 stars from 3. McDonald’s has lost 15.24% over the past three months and 10.00% over the past year. The large-value stock has a wide economic moat. McDonald’s is trading at an 8% discount to its fair value estimate of $300, with an Uncertainty Rating of Low.

Arista Networks ANET

• Morningstar Rating: ★★★★
• Fair Value Estimate: $190
• Uncertainty Rating: High

Computer hardware company Arista Networks dropped 17.91% over the past week. The company’s stock is up 3.11% over the past three months and 62.45% over the past year. The stock’s fair value estimate rose to $190 from $175 during the week. It ended the week trading at a 25% discount to its new fair value estimate, with an Uncertainty Rating of High. The large-growth stock has a wide economic moat.

GSK GSK

• Morningstar Rating: ★★★★
• Fair Value Estimate: $58
• Uncertainty Rating: Medium

Following a 2.33% loss over the past week, drug manufacturer GSK saw its Morningstar Rating move to 4 stars from 3. GSK has lost 15.63% over the past three months and has gained 42.23% over the past year. The large-value stock has a wide economic moat. GSK is trading at a 13% discount to its fair value estimate of $58, with an Uncertainty Rating of Medium.