40 New 4-Star Stocks

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Each week, we screen the US-listed stocks under Morningstar’s coverage for newly undervalued names.

For the week ended Dec. 20, 40 stocks saw their Morningstar Ratings change to 4 stars, while another 12 entered 5-star territory. Stocks rated 3 stars are fairly valued according to Morningstar analysts, while those rated 1 or 2 stars are considered overvalued.

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

• Oracle ORCL
• ExxonMobil XOM
• UnitedHealth Group UNH
• Chevron CVX
• Shell SHEL

The five new 5-star stocks with the largest market capitalization are:

• Elevance Health ELV
• Schlumberger SLB
• Humana HUM
• Halliburton HAL
• Eversource Energy ES

The full lists of new 4- and 5-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 Undervalued Stocks for the Week Ended Dec. 20

The Morningstar US Market Index fell 2.21% last week, leaving the overall US stock market moderately overvalued, hovering at an 8% premium to its fair value estimate on a cap-weighted basis.

Of the 874 US-listed stocks covered by Morningstar analysts:

• Thirty-six percent are undervalued, 39% are fairly valued, and 25% are overvalued.
• Forty are newly undervalued.
• One is newly overvalued.
• Twelve moved from a 4-star rating to a 5-star rating.
• One moved from a 5-star rating to a 4-star rating.
• Among the newly undervalued stocks, none jumped from a 3-star rating to a 5-star rating.
• Two are no longer undervalued.

Morningstar analysts assign every stock under their coverage a fair value estimate, which is an intrinsic measure of the stock’s worth, and a Morningstar 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, are used to determine its Morningstar Rating.

Metrics for This Week’s Largest New 4-Star Stocks

Oracle

• Morningstar Rating: 4 stars
• One-Week Return: -2.15%

Software infrastructure firm Oracle has climbed 1.22% over the past three months and 64.89% over the past year. The stock is trading at a 13% discount to its fair value estimate of $195 per share and has an Uncertainty Rating of Medium. Oracle is a large-core company with a Morningstar Economic Moat Rating of narrow.

ExxonMobil

• Morningstar Rating: 4 stars
• One-Week Return: -4.48%

Oil and gas firm ExxonMobil has lost 7.40% over the past three months and gained 8.11% over the past year. The large-value stock has a narrow economic moat rating. ExxonMobil is trading at a 22% discount to its fair value estimate of $135 and has an Uncertainty Rating of High.

UnitedHealth Group

• Morningstar Rating: 4 stars
• One-Week Return: -3.91%

Healthcare plans company UnitedHealth Group has dropped 12.70% over the past three months and 1.55% over the past year. The stock is trading at a 15% discount to its fair value estimate of $590 and has an Uncertainty Rating of Medium. UnitedHealth Group is a large-value company with a narrow economic moat.

Chevron

• Morningstar Rating: 4 stars
• One-Week Return: -7.16%

Oil and gas firm Chevron has lost 0.95% over the past three months and 0.88% over the past year. The large-value stock has a narrow economic moat. Chevron is trading at a 19% discount to its fair value estimate of $176 and has an Uncertainty Rating of High.

Shell

• Morningstar Rating: 4 stars
• One-Week Return: -4.56%

Oil and gas firm Shell is down 10.83% over the past three months and 2.97% over the past year. The stock’s price is 19% below its fair value estimate of $75, and it has an Uncertainty Rating of High. The large-value stock has an economic moat rating of none.

Metrics for This Week’s Largest New 5-Star Stocks

Elevance Health

• Morningstar Rating: 5 stars
• One-Week Return: -4.05%

Healthcare plans company Elevance Health has lost 31.93% over the past three months and 19.23% over the past year. The large-value stock has a narrow economic moat. Elevance Health is trading at a 33% discount to its fair value estimate of $550 and has an Uncertainty Rating of Medium.

Schlumberger

• Morningstar Rating: 5 stars
• One-Week Return: -8.43%

Oil and gas equipment and services company Schlumberger has dropped 12.60% over the past three months and 28.13% over the past year. The stock is trading at a 35% discount to its fair value estimate of $57 and has an Uncertainty Rating of Medium. Schlumberger is a mid-value company with a narrow economic moat.

Humana

• Morningstar Rating: 5 stars
• One-Week Return: -9.86%

Healthcare plans company Humana has lost 20.17% over the past three months and 44.79% over the past year. The mid-value stock has a narrow economic moat. Humana is trading at a 42% discount to its fair value estimate of $425 and has an Uncertainty Rating of High.

Halliburton

• Morningstar Rating: 5 stars
• One-Week Return: -9.45%

Oil and gas equipment and services company Halliburton has dropped 11.39% over the past three months and 27.25% over the past year. The fair value estimate for Halliburton was cut to $37 from $39 during the week. The stock ended the week trading at a 30% discount to its new fair value estimate, and it has an Uncertainty Rating of Medium. Halliburton is a mid-value company with a narrow economic moat.

Eversource Energy

• Morningstar Rating: 5 stars
• One-Week Return: -3.10%

Regulated electric company Eversource Energy has lost 13.17% over the past three months and 1.37% over the past year. The mid-value stock has no economic moat. Eversource Energy is trading at a 22% discount to its fair value estimate of $73 and has an Uncertainty Rating of Low.