3 New 5-Star Stocks This Week
PayPay and CRISPR are now seen as significantly undervalued.
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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 Morningstar Ratings. For the week ended Oct. 16, 10 stocks saw their ratings change to 4 stars, while three joined the 74 US-listed names in 5-star territory.
The three new 5-star stocks, ordered by market capitalization, are:
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 fair value estimate—Morningstar’s estimate of its intrinsic worth—and its Uncertainty Rating, 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 Total Market Index fell 2.06% over the past week as of Oct. 16, leaving the overall US stock market moderately undervalued, hovering at an 8% discount to its fair value estimate on a market cap-weighted basis.
Of the 869 US-listed stocks covered by Morningstar analysts:
- 43% are undervalued, 40% are fairly valued, and 17% are overvalued.
- 10 are newly undervalued.
- 11 are newly overvalued.
- Three moved from a 4-star rating to a 5-star rating.
- Five moved from a 5-star rating to a 4-star rating.
- No newly undervalued stocks jumped from a 3-star rating to a 5-star rating.
- 30 are no longer undervalued.
Metrics for This Week’s New 5-Star Stocks
PayPay PAYP
- Morningstar Rating: ★★★★★
- Fair Value: $26.00
- Uncertainty Rating: High
Following a 0.19% loss over the past week, software infrastructure firm PayPay saw its Morningstar Rating move to 5 stars from 4. PayPay has gained 1.55% over the past three months. The stock has a narrow economic moat. PayPay is trading at a 40% discount to its fair value estimate of $26 per share, with an Uncertainty Rating of High.
CRISPR Therapeutics CRSP
- Morningstar Rating: ★★★★★
- Fair Value: $106.00
- Uncertainty Rating: Very High
Biotechnology firm CRISPR dropped 7.75% over the past week, bumping its Morningstar Rating to 5 stars from 4. The company’s stock is up 1.40% over the past three months and is down 28.03% over the past year. The stock’s price is 54% below its fair value estimate of $106 per share, with an Uncertainty Rating of Very High. The mid-value stock has no economic moat.
Cogent Communications Holdings CCOI
- Morningstar Rating: ★★★★★
- Fair Value: $17.00
- Uncertainty Rating: Very High
Telecom services firm Cogent lost 5.50% over the past week, shifting its Morningstar Rating to 5 stars from 4. Cogent has dropped 30.93% over the past three months and 81.91% over the past year. The stock is trading at a 53% discount to its fair value estimate of $17 per share, with an Uncertainty Rating of Very High. Cogent is a small-value company with a narrow economic moat.
This article was generated with the help of automation and reviewed by Morningstar editors. Learn more about Morningstar’s use of automation.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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