4 New 5-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 July 10, 10 stocks saw their ratings change to 4 stars, while four joined the 85 US-listed names in 5-star territory.

The four new 5-star stocks, ordered by market capitalization, are:

• Hershey HSY
• Paramount Skydance PSKY
• Mattel MAT
• Cogent Communications CCOI

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 1.08% over the past week as of July 10, 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 879 US-listed stocks covered by Morningstar analysts:

• 35% are undervalued, 42% are fairly valued, and 23% are overvalued.
• 10 are newly undervalued.
• 10 are newly overvalued.
• Four moved from a 4-star rating to a 5-star rating.
• Four moved from a 5-star rating to a 4-star rating.
• None of the newly undervalued stocks jumped from a 3-star rating to a 5-star rating.
• 16 are no longer undervalued.

Metrics for This Week’s New 5-Star Stocks

Hershey HSY

• Morningstar Rating: ★★★★★
• Fair Value Estimate: $228.00
• Uncertainty Rating: Low

Confectioner Hershey lost 4.66% over the past week. Hershey has dropped 13.49% over the past three months and has climbed 8.65% over the past year. The stock’s fair value estimate rose to $228 per share from $218 during the week. It ended the week trading at a 24% discount to its new fair value estimate, with an Uncertainty Rating of Low. Hershey is a mid-core company with a wide economic moat.

Paramount Skydance PSKY

• Morningstar Rating: ★★★★★
• Fair Value Estimate: $20.00
• Uncertainty Rating: Very High

Following a 9.43% loss over the past week, entertainment company Paramount saw its Morningstar Rating move to 5 stars from 4. Paramount has lost 10.97% over the past three months and 25.08% over the past year. The small-value stock has no economic moat. Paramount is trading at a 53% discount to its fair value estimate of $20 per share, with an Uncertainty Rating of Very High.

Mattel MAT

• Morningstar Rating: ★★★★★
• Fair Value Estimate: $23.00
• Uncertainty Rating: High

Leisure company Mattel lost 0.07% over the past week, shifting its Morningstar Rating to 5 stars from 4. Mattel has dropped 8.95% over the past three months and 34.08% over the past year. The stock is trading at a 42% discount to its fair value estimate of $23 per share, with an Uncertainty Rating of High. Mattel is a small-value company with a narrow economic moat.

Cogent Communications CCOI

• Morningstar Rating: ★★★★★
• Fair Value Estimate: $25.00
• Uncertainty Rating: Very High

Telecom services firm Cogent dropped 2.93% over the past week, bumping its Morningstar Rating to 5 stars from 4. The company’s stock is down 37.84% over the past three months and 74.28% over the past year. The stock’s price is 50% below its fair value estimate of $25 per share, with an Uncertainty Rating of Very High. The small-value stock has a narrow economic moat.