New 4-Star Stocks
CVS and Marvell are among the names that fell into undervalued territory.
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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-star Morningstar Ratings. For the week ended Dec. 5, seven stocks saw their ratings change to 4 stars.
The five new 4-star stocks with the largest market capitalization are:
The full list of new 4-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.
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 rose 0.38% over the past week as of Dec. 5, leaving the overall US stock market slightly overvalued, hovering at a 2.00% premium to its fair value estimate on a market cap-weighted basis.
Of the 830 US-listed stocks covered by Morningstar analysts:
- 38% are undervalued, 40% are fairly valued, and 22% are overvalued.
- Seven are newly undervalued.
- 15 are newly overvalued.
- One moved from a 4-star rating to a 5-star rating.
- Eight 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.
- 19 are no longer undervalued.
Metrics for This Week’s New 4-Star Stocks
CVS Health
- Morningstar Rating: ★★★★
- Fair Value Estimate: $92.00
- Uncertainty Rating: High
Healthcare plans company CVS dropped 5.89% over the past week, bumping its Morningstar Rating to 4 stars from 3. The stock is up 3.35% over the past three months and 38.63% over the past year. Its price is 18% below its fair value estimate of $92 per share, with an Uncertainty Rating of High. The large-value stock has no economic moat.
Marvell Technology
- Morningstar Rating: ★★★★
- Fair Value Estimate: $120.00
- Uncertainty Rating: High
Following a 10.64% gain over the past week, semiconductor company Marvell saw its Morningstar Rating move to 4 stars from 3. Marvell has gained 56.29% over the past three months and has lost 12.48% over the past year. The mid-growth stock has a narrow economic moat. The stock’s fair value estimate rose to $120 per share from $90 during the week. It ended the week trading at an 18% discount to its new fair value estimate, with an Uncertainty Rating of High.
Northrop Grumman
- Morningstar Rating: ★★★★
- Fair Value Estimate: $630.00
- Uncertainty Rating: Medium
Aerospace and defense company Northrop Grumman dropped 3.66% over the past week, bumping its Morningstar Rating to 4 stars from 3. The company’s stock is down 5.08% over the past three months and is up 16.46% over the past year. The stock’s price is 13% below its fair value estimate of $630 per share, with an Uncertainty Rating of Medium. The large-value stock has a wide economic moat.
Datadog
- Morningstar Rating: ★★★★
- Fair Value Estimate: $186.00
- Uncertainty Rating: High
Software application firm Datadog lost 5.37% over the past week, shifting its Morningstar Rating to 4 stars from 3. Datadog has climbed 11.27% over the past three months and has dropped 7.31% over the past year. The stock is trading at a 19% discount to its fair value estimate of $186 per share, with an Uncertainty Rating of High. Datadog is a mid-growth company with a wide economic moat.
Diamondback Energy
- Morningstar Rating: ★★★★
- Fair Value Estimate: $193
- Uncertainty Rating: High
Following a 3.94% gain over the past week, oil and gas exploration and production company Diamondback saw its Morningstar Rating move to 4 stars from 3. Diamondback has gained 15.13% over the past three months and has lost 5.53% over the past year. The mid-value stock has a narrow economic moat. The stock’s fair value estimate rose to $193 per share from $168 during the week. It ended the week trading at an 18% discount to its new fair value estimate, 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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