29 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. 17, 29 stocks saw their Morningstar Ratings change to 2 stars, while three 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:

• Citigroup C
• KKR KKR
• Vertex Pharmaceuticals VRTX
• CRH CRH
• Snowflake SNOW

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

• JPMorgan Chase JPM
• Stryker SYK
• Allstate ALL

The full list of new 2-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.

Newly Overvalued Stocks for the Week Ended Jan. 17

The Morningstar US Market Index rose 3.11% over the past week, leaving the overall US stock market significantly overvalued, hovering at a 10% premium to its fair value estimate on a cap-weighted basis.

Of the 860 US-listed stocks covered by Morningstar analysts:

• 37% are undervalued, 38% are fairly valued, and 25% are overvalued.
• 29 are newly overvalued.
• Four are newly undervalued.
• Three 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.
• Five 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

Citigroup

• Morningstar Rating: ★★
• One-Week Return: 12.03%

Diversified bank Citigroup has gained 26.17% over the past three months and 61.60% over the past year. The large-value stock has no economic moat. Citigroup is trading at a 14% premium to its fair value estimate of $70 per share, with an Uncertainty Rating of Medium.

KKR

• Morningstar Rating: ★★
• One-Week Return: 11.81%

Asset management firm KKR has climbed 14.46% over the past three months and 95.27% over the past year. The stock is trading at a 21% premium to its fair value estimate of $130 per share, with an Uncertainty Rating of High. KKR is a large-growth company with a narrow economic moat.

Vertex Pharmaceuticals

• Morningstar Rating: ★★
• One-Week Return: 3.04%

Biotechnology firm Vertex is down 15.39% over the past three months and 2.71% over the past year. The stock’s price is 19% above its fair value estimate of $356 per share, with an Uncertainty Rating of High. The large-value stock has a narrow economic moat.

CRH

• Morningstar Rating: ★★
• One-Week Return: 6.50%

Building materials firm CRH has gained 4.74% over the past three months and 45.95% over the past year. The mid-core stock has a narrow economic moat. CRH is trading at a 14% premium to its fair value estimate of $86 per share, with an Uncertainty Rating of Medium.

Snowflake

• Morningstar Rating: ★★
• One-Week Return: 5.13%

Software application firm Snowflake is up 43.48% over the past three months and down 9.21% over the past year. The stock’s price is 32% above its fair value estimate of $129 per share, with an Uncertainty Rating of Very High. The mid-growth stock has no economic moat.

Metrics for this Week’s New 1-Star Stocks

JP Morgan Chase

• Morningstar Rating: ★
• One-Week Return: 8.04%

Diversified bank JPMorgan has gained 16.08% over the past three months and 58.64% over the past year. The large-value stock has a wide economic moat. JPMorgan is trading at a 46% premium to its fair value estimate of $178 per share, with an Uncertainty Rating of Medium.

Stryker

• Morningstar Rating: ★
• One-Week Return: 4.86%

Medical devices company Stryker has climbed 6.83% over the past three months and 23.35% over the past year. The stock is trading at a 39% premium to its fair value estimate of $276 per share, with an Uncertainty Rating of Medium. Stryker is a large-core company with a wide economic moat.

Allstate

• Morningstar Rating: ★
• One-Week Return: 4.37%

Property and casualty insurance firm Allstate is down 2.95% over the past three months and up 26.41% over the past year. The stock’s price is 37% above its fair value estimate of $138 per share, with an Uncertainty Rating of Medium. The mid-growth stock has no economic moat.