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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 June 5, 19 stocks saw their ratings change to 4 stars, while none joined the 72 US-listed names in 5-star territory
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
—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 Market Index fell 2.46% over the past week as of June 5, 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 871 US-listed stocks covered by Morningstar analysts:
- 41% are undervalued, 38% are fairly valued, and 21% are overvalued.
- 19 are newly undervalued.
- Six are newly overvalued.
- None moved from a 4-star rating to a 5-star rating.
- Six 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.
- 15 are no longer undervalued.
Metrics for This Week’s New 4-Star Stocks
Broadcom
- Morningstar Rating: ★★★★
- Fair Value Estimate: $650.00
- Uncertainty Rating: High
Semiconductor company Broadcom lost 13.66% over the past week. Broadcom has climbed 16.15% over the past three months and 49.59% over the past year. The stock’s fair value estimate rose to $650 per share from $500 during the week. It ended the week trading at a 41% discount to its new fair value estimate, with an Uncertainty Rating of High. Broadcom is a large-growth company with a wide economic moat.
MasterCard
- Morningstar Rating: ★★★★
- Fair Value Estimate: $550.00
- Uncertainty Rating: Medium
Following a 0.59% loss over the past week, credit services firm MasterCard saw its Morningstar Rating move to 4 stars from 3. MasterCard has lost 6.24% over the past three months and 15.62% over the past year. The large-core stock has a wide economic moat. MasterCard is trading at an 11% discount to its fair value estimate of $550 per share, with an Uncertainty Rating of Medium.
Linde
- Morningstar Rating: ★★★★
- Fair Value Estimate: $540.00
- Uncertainty Rating: Low
Specialty chemicals company Linde gained 2.37% over the past week. Linde has climbed 4.31% over the past three months and 9.45% over the past year. The stock’s fair value estimate rose to $540 per share from $508 during the week. It ended the week trading at a 6% discount to its new fair value estimate, with an Uncertainty Rating of Low. Linde is a large-core company with a wide economic moat.
AT&T
- Morningstar Rating: ★★★★
- Fair Value Estimate: $27.00
- Uncertainty Rating: Medium
Telecom services firm AT&T dropped 8.27% over the past week, bumping its Morningstar Rating to 4 stars from 3. The company’s stock is down 20.65% over the past three months and 14.47% over the past year. The stock’s price is 16% below its fair value estimate of $27, with an Uncertainty Rating of Medium. The large-value stock has a narrow economic moat.
Duke Energy
- Morningstar Rating: ★★★★
- Fair Value Estimate: $131.00
- Uncertainty Rating: Low
Regulated electric company Duke gained 1.21% over the past week, shifting its Morningstar Rating to 4 stars from 3. Duke has dropped 4.78% over the past three months and has climbed 11.08% over the past year. The stock is trading at a 5% discount to its fair value estimate of $131 per share, with an Uncertainty Rating of Low. Duke is a large-value company with a narrow 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.
