1 Newly Overvalued Stock

Every Monday, get Morningstar’s insights on company news, the latest stock market trends, and in-depth company reports from our analysts. Sign up for our Stock Strategist newsletter here.

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

For the week ended Dec. 27, one stock saw its Morningstar Rating change to 2 stars, while none climbed into 1-star territory. Stocks rated 3 stars are fairly valued according to Morningstar analysts, while those rated 4 or 5 stars are considered undervalued.

The new 2-star stock is:

• Treehouse Foods THS

All returns in this article are reported in the stock’s base currency and all data is sourced from Morningstar Direct.

Newly Overvalued Stocks for the Week Ended Dec. 27

The Morningstar US Market Index rose 0.59% over the past week, leaving the overall US stock market moderately overvalued, hovering at a 9% premium to its fair value estimate on a cap-weighted basis.

Of the 873 US-listed stocks covered by Morningstar analysts:

• 36% are undervalued, 39% are fairly valued, and 25% are overvalued.
• One is newly overvalued.
• Two are newly undervalued.
• None moved from a 2-star rating to a 1-star rating.
• Among the newly overvalued stocks, none jumped from a 3-star rating to a 1-star rating.
• One is no longer overvalued.

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

Metrics for this Week’s New 2-Star Stock

Treehouse Foods

• Morningstar Rating: 2 stars
• One-Week Return: 4.52%

Packaged foods company Treehouse has dropped 16.39% over the past three months and 13.78% over the past year. The stock is trading at a 17% premium to its fair value estimate of $30 per share, with an Uncertainty Rating of High. Treehouse Foods is a small-core company with no moat.