3 New 5-Star Stocks This Week
Tyler Technologies and Zimmer Biomet 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 Jan. 23, seven stocks saw their ratings change to 4 stars, while three joined the 49 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 Market Index fell 0.4% over the past week as of Jan. 23, leaving the overall US stock market slightly undervalued, hovering at a 4.0% discount to its fair value estimate on a market cap-weighted basis.
Of the 830 US-listed stocks covered by Morningstar analysts:
- 33% are undervalued, 41% are fairly valued, and 26% are overvalued.
- Seven are newly undervalued.
- 14 are newly overvalued.
- Three 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.
- 12 are no longer undervalued.
Metrics for This Week’s New 5-Star Stocks
Tyler Technologies
- Morningstar Rating: ★★★★★
- Fair Value Estimate: $650.00
- Uncertainty Rating: Medium
Following a 1.19% loss over the past week, software application firm Tyler Technologies saw its Morningstar Rating move to 5 stars from 4. Tyler Technologies has lost 15.78% over the past three months and 26.74% over the past year. The mid-growth stock has a wide economic moat. Tyler Technologies is trading at a 33% discount to its fair value estimate of $650 per share, with an Uncertainty Rating of Medium.
Zimmer Biomet
- Morningstar Rating: ★★★★★
- Fair Value Estimate: $130.00
- Uncertainty Rating: Medium
Medical devices company Zimmer Biomet lost 0.81% over the past week, shifting its Morningstar Rating to 5 stars from 4. Zimmer Biomet has dropped 15.83% over the past three months and 21.22% over the past year. The stock is trading at a 33% discount to its fair value estimate of $130 per share, with an Uncertainty Rating of Medium. Zimmer Biomet is a mid-value company with a wide economic moat.
Clarivate
- Morningstar Rating: ★★★★★
- Fair Value Estimate: $5.50
- Uncertainty Rating: High
Information technology services company Clarivate dropped 10.09% over the past week, bumping its Morningstar Rating to 5 stars from 4. The company’s stock is down 22.97% over the past three months and 48.18% over the past year. The stock’s price is 48% below its fair value estimate of $5.50 per share, with an Uncertainty Rating of High. The small-value stock has no 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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