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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 31, 23 stocks saw their ratings change to 4 stars, while two joined the 63 US-listed names in 5-star territory.
The two 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
—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 Total Market Index rose 0.95% over the past week as of July 31, leaving the overall US stock market moderately undervalued, hovering at an 8% discount to its fair value estimate on a market cap-weighted basis.
Of the 879 US-listed stocks covered by Morningstar analysts:
- 34% are undervalued, 44% are fairly valued, and 22% are overvalued.
- 23 are newly undervalued.
- 15 are newly overvalued.
- Two moved from a 4-star rating to a 5-star rating.
- 21 moved from a 5-star rating to a 4-star rating.
- Among the newly undervalued stocks, zero jumped from a 3-star rating to a 5-star rating.
- 30 are no longer undervalued.
Metrics for This Week’s New 5-Star Stocks
Warner Music Group WMG
- Morningstar Rating: ★★★★★
- Fair Value Estimate: $39
- Uncertainty Rating: Medium
Following a 2.22% loss over the past week, entertainment company Warner Music Group saw its Morningstar Rating move to 5 stars from 4. Warner Music Group has lost 7.67% over the past three months and 9.12% over the past year. The small-growth stock has a narrow economic moat. Warner Music Group is trading at a 33% discount to its fair value estimate of $39, with an Uncertainty Rating of Medium.
SK Telecom SKM
- Morningstar Rating: ★★★★★
- Fair Value Estimate: $44.70
- Uncertainty Rating: Medium
Telecom services firm SK Telecom lost 11.33% over the past week, shifting its Morningstar Rating to 5 stars from 4. SK Telecom has dropped 14.77% over the past three months and has climbed 45.92% over the past year. The stock is trading at a 29% discount to its fair value estimate of $44.70, with an Uncertainty Rating of Medium. SK Telecom is a large-value company with 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.
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