Once a week, we examine U.S.-listed stocks eligible for our coverage, searching for those that may have become overvalued. For the week ending December 5, we identified 15 stocks that were downgraded to two stars, while one additional stock joined the ranks of 30 other U.S.-listed stocks with one star.
Here are five new two-star stocks with the largest market capitalizations:
- Palantir Technologies PLTR
- AppLovin app
- Applied Materials AMAT
- Mitsubishi UFJ Financial Group MUFG
- KLA
The list of new one-star stocks is also included. It’s worth noting that all returns mentioned are reported in the stock’s base currency, and the data is sourced from our integrated analysis tool.
What is a Morningstar Stock Rating?
The Morningstar Ratings are designed to filter out the clutter in the market, helping investors pinpoint stocks that are genuinely undervalued or overvalued. The rating stems from three components: the current stock price, the estimated fair value, and an uncertainty rating assessing the volatility of that estimate. Stocks rated four or five stars are seen as undervalued, three-star stocks are deemed fairly valued, while those earning one or two stars are considered overvalued.
Latest stock valuation trends
According to our latest insights, as of December 5, the U.S. stock market overall appears slightly overvalued, having seen an increase of 0.38% over the previous week. It’s currently trading at about a 2.00% premium according to market capitalization-weighted fair value estimates.
Among the 830 stocks monitored by our analysts, the evaluations are as follows:
- 38% are undervalued, 40% are fairly valued, and 22% are overvalued.
- Seven stocks have newly entered the undervalued category.
- Fifteen stocks have been marked as newly overvalued.
- One stock’s rating shifted from two stars to one star.
- Two stocks rose from one star to two stars.
- No recently overvalued stocks transitioned from three stars to one star.
- Ten stocks are no longer classified as overvalued.
This week’s new 2-star stock indicators
Palantir Technologies
- Morningstar Rating: ★★
- Fair value estimate: $135.00
- Uncertainty rating: Very high
Palantir, which specializes in software infrastructure, has experienced a 7.90% uptick over the past week, leading to a change in its rating from three stars to two. Over the last three months, it has gained 18.71%, and a remarkable 152.90% over the past year, but it’s currently trading at a 35% premium compared to its fair value estimate.
AppLovin
- Morningstar Rating: ★★
- Fair value estimate: $500.00
- Uncertainty rating: Very high
AppLovin has also seen its rating adjusted from three stars to two, following a 15.42% increase last week. In the past three months, its stock has gone up by 41.14%, and 82.54% over the year. It’s trading at a notable 38% premium to its estimated fair value.
Applied Materials
- Morningstar Rating: ★★
- Fair value estimate: $225.00
- Uncertainty rating: High
Applied Materials has risen by 6.24% this past week, changing its rating from three stars to two. It has enjoyed a 65.01% increase in the last three months and a 57.37% increase over the year, currently trading at a 19% premium.
Mitsubishi UFJ Financial Group
- Morningstar Rating: ★★
- Fair value estimate: $14.00
- Uncertainty rating: Medium
Mitsubishi UFJ saw its rating increase from three stars to two after a 3.17% rise last week. The stock is trading at a 16% premium to its fair value estimate.
KLA
- Morningstar Rating: ★★
- Fair value estimate: $1,000.00
- Uncertainty rating: High
KLA has seen a 3.32% rise recently, prompting its upgrade from three stars to two. Its stock price has surged by 34.41% in the last three months.
This week’s new 1-star stock indicators
Micron Technology
- Morningstar Rating: ★
- Fair value estimate: $150.00
- Uncertainty rating: High
Micron Technology’s rating has dropped from two stars to one following a small gain of 0.31%. Despite a staggering 80.68% increase in three months, the stock is trading at a substantial 58% premium to its estimated fair value.
