30 Newly Overvalued Stocks This Week

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Once a week, we screen the US-listed stocks under Morningstar’s coverage for newly overvalued names—those whose prices have just climbed into ranges warranting 1- or 2-star Morningstar Ratings. For the week ended Nov. 6, 30 stocks saw their ratings change to 2 stars, while eight joined the 32 US-listed names in 1-star territory.

The five new 2-star stocks with the largest market capitalization are:

• Berkshire Hathaway BRK.A
• Bank of New York Mellon BNY
• Cintas CTAS
• Royal Caribbean Cruises RCL
• Illinois Tool Works ITW

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

• Costco COST
• Allstate ALL
• Idexx Laboratories IDXX
• InterContinental Hotels Group IHG
• Darden Restaurants DRI

The full lists of new 2- and 1-star stocks is 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 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 2.6% over the past week as of Nov. 6, leaving the overall US stock market significantly undervalued, hovering at a 12.0% discount to its fair value estimate on a market cap-weighted basis.

Of the 877 US-listed stocks covered by Morningstar analysts:

• 40% are undervalued, 41% are fairly valued, and 18% are overvalued.
• 41 are newly undervalued.
• 30 are newly overvalued.
• Eight moved from a 2-star rating to a 1-star rating.
• Seven moved from a 1-star rating to a 2-star rating.
• No newly overvalued stocks jumped from a 3-star rating to a 1-star rating.
• 29 are no longer overvalued.

Metrics for This Week’s New 2-Star Stocks

Berkshire Hathaway BRK.A

• Morningstar Rating: ★★
• Fair Value: $765,000.00
• Uncertainty Rating: Low

Diversified insurance firm Berkshire Hathaway gained 5.03% over the past week, shifting its Morningstar Rating to 2 stars from 3. Berkshire Hathaway has climbed 8.98% over the past three months and 15.77% over the past year. The stock is trading at a 12% premium to its fair value estimate of $765,000 per share, with an Uncertainty Rating of Low. Berkshire Hathaway is a large-value company with a narrow economic moat.

Bank of New York Mellon BNY

• Morningstar Rating: ★★
• Fair Value: $135.00
• Uncertainty Rating: Medium

Following a 0.41% gain over the past week, diversified bank BNY Mellon saw its Morningstar Rating move to 2 stars from 3. BNY Mellon has lost 6.59% over the past three months and has gained 38.54% over the past year. The large-value stock has a wide economic moat. BNY Mellon is trading at a 9% premium to its fair value estimate of $135 per share, with an Uncertainty Rating of Medium.

Cintas CTAS

• Morningstar Rating: ★★
• Fair Value: $200.00
• Uncertainty Rating: Medium

Specialty business services firm Cintas climbed 1.16% over the past week, bumping its Morningstar Rating to 2 stars from 3. The company’s stock is up 10.28% over the past three months and 21.48% over the past year. The stock’s price is 11% above its fair value estimate of $200 per share, with an Uncertainty Rating of Medium. The mid-growth stock has a wide economic moat.

Royal Caribbean Cruises RCL

• Morningstar Rating: ★★
• Fair Value: $270.00
• Uncertainty Rating: High

Following a 6.50% gain over the past week, travel services company Royal Caribbean saw its Morningstar Rating move to 2 stars from 3. Royal Caribbean has gained 2.68% over the past three months and 31.64% over the past year. The mid-core stock has a narrow economic moat. Royal Caribbean is trading at a 21% premium to its fair value estimate of $270 per share, with an Uncertainty Rating of High.

Illinois Tool Works ITW

• Morningstar Rating: ★★
• Fair Value: $253.00
• Uncertainty Rating: Medium

Specialty industrial machinery firm Illinois Tool Works climbed 0.86% over the past week, bumping its Morningstar Rating to 2 stars from 3. The company’s stock is down 4.03% over the past three months and is up 17.95% over the past year. The stock’s price is 11% above its fair value estimate of $253 per share, with an Uncertainty Rating of Medium. The mid-core stock has a wide economic moat.

Metrics for This Week’s New 1-Star Stocks

Costco COST

• Morningstar Rating: ★
• Fair Value: $770.00
• Uncertainty Rating: Medium

Discount store Costco climbed 4.08% over the past week, bumping its Morningstar Rating to 1 star from 2. The stock is up 11.16% over the past three months and 14.74% over the past year. The stock’s price is 37% above its fair value estimate of $770 per share, with an Uncertainty Rating of Medium. The large-core stock has a wide economic moat.

Allstate ALL

• Morningstar Rating: ★
• Fair Value: $191.00
• Uncertainty Rating: Medium

Property and casualty insurance firm Allstate lost 1.95% over the past week, shifting its Morningstar Rating to 1 star from 2. Allstate has dropped 6.99% over the past three months and has climbed 31.18% over the past year. The stock is trading at a 33% premium to its fair value estimate of $191 per share, with an Uncertainty Rating of Medium. Allstate is a mid-core company with no economic moat.

Idexx Laboratories IDXX

• Morningstar Rating: ★
• Fair Value: $470.00
• Uncertainty Rating: Medium

Following a 22.65% gain over the past week, diagnostics and research firm Idexx saw its Morningstar Rating move to 1 star from 2. Idexx has gained 14.58% over the past three months and has lost 5.28% over the past year. The mid-growth stock has a wide economic moat. Idexx is trading at a 44% premium to its fair value estimate of $470 per share, with an Uncertainty Rating of Medium.

InterContinental Hotels Group IHG

• Morningstar Rating: ★
• Fair Value: $129.00
• Uncertainty Rating: Medium

Lodging company InterContinental Hotels climbed 6.52% over the past week, bumping its Morningstar Rating to 1 star from 2. The company’s stock is up 12.66% over the past three months and 43.85% over the past year. The stock’s price is 39% above its fair value estimate of $129 per share, with an Uncertainty Rating of Medium. The large-growth stock has a wide economic moat.

Darden Restaurants DRI

• Morningstar Rating: ★
• Fair Value: $163.00
• Uncertainty Rating: Medium

Restaurant Darden gained 2.81% over the past week, shifting its Morningstar Rating to 1 star from 2. Darden has climbed 8.18% over the past three months and 31.56% over the past year. The stock is trading at a 39% premium to its fair value estimate of $163 per share, with an Uncertainty Rating of Medium. Darden is a mid-core company with a narrow economic moat.