5 New 5-Star Stocks This Week
BCE and Watsco 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. 9, 13 stocks saw their ratings change to 4 stars, while five joined the 77 US-listed names in 5-star territory.
The five 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 rose 1.05% over the past week as of Oct. 9, leaving the overall US stock market moderately undervalued, hovering at a 6% discount to its fair value estimate on a market cap-weighted basis.
Of the 867 US-listed stocks covered by Morningstar analysts:
- 45% are undervalued, 37% are fairly valued, and 18% are overvalued.
- 13 are newly undervalued.
- 11 are newly overvalued.
- Five moved from a 4-star rating to a 5-star rating.
- Three 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.
- 17 are no longer undervalued.
Metrics for This Week’s New 5-Star Stocks
BCE BCE
- Morningstar Rating: ★★★★★
- Fair Value: $29.00
- Uncertainty Rating: Medium
Telecom services firm BCE dropped 4.82% over the past week, bumping its Morningstar Rating to 5 stars from 4. The company’s stock is down 10.70% over the past three months and 15.59% over the past year. The stock’s price is 35% below its fair value estimate of $29 per share, with an Uncertainty Rating of Medium. The mid-value stock has no economic moat.
Watsco WSO
- Morningstar Rating: ★★★★★
- Fair Value: $433.00
- Uncertainty Rating: Medium
Following a 5.91% loss over the past week, industrial distributor Watsco saw its Morningstar Rating move to 5 stars from 4. Watsco has lost 25.26% over the past three months and 24.06% over the past year. The small-value stock has a narrow economic moat. Watsco is trading at a 35% discount to its fair value estimate of $433 per share, with an Uncertainty Rating of Medium.
Fresenius Medical Care FMS
- Morningstar Rating: ★★★★★
- Fair Value: $38.00
- Uncertainty Rating: High
Medical care facilities firm Fresenius dropped 5.35% over the past week, bumping its Morningstar Rating to 5 stars from 4. The company’s stock is down 11.92% over the past three months and 19.34% over the past year. The stock’s price is 45% below its fair value estimate of $38 per share, with an Uncertainty Rating of High. The mid-value stock has a narrow economic moat.
CarMax KMX
- Morningstar Rating: ★★★★★
- Fair Value: $96.00
- Uncertainty Rating: High
Auto and truck dealership CarMax lost 4.21% over the past week, shifting its Morningstar Rating to 5 stars from 4. CarMax has climbed 3.14% over the past three months and 19.27% over the past year. The stock is trading at a 45% discount to its fair value estimate of $96 per share, with an Uncertainty Rating of High. CarMax is a small-core company with a narrow economic moat.
Mosaic MOS
- Morningstar Rating: ★★★★★
- Fair Value: $35.00
- Uncertainty Rating: High
Following an 11.06% loss over the past week, agricultural inputs company Mosaic saw its Morningstar Rating move to 5 stars from 4. Mosaic has lost 8.90% over the past three months and 41.92% over the past year. The small-value stock has no economic moat. Mosaic is trading at a 46% discount to its fair value estimate of $35, with an Uncertainty Rating of High.
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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