Each week, we analyze U.S.-listed stocks monitored by Morningstar to find those that have recently become undervalued, typically rated with four or five stars. During the week concluding on February 13, 22 stocks received a new 4-star rating, and seven stocks were upgraded to the 5-star category, adding to the existing 66 stocks in that top tier.
Here are the five newly rated 5-star stocks with the largest market capitalizations:
- Salesforce CRM
- S&P Global SPGI
- IQVIA IQV
- Dassault Systèmes DASTY
- Molina Healthcare
A full list of new 5-star stocks is available at the end of this article. All returns mentioned are in the stock’s base currency, sourced from Morningstar Direct.
Understanding the Morningstar Stock Rating
The Morningstar Ratings are designed to help investors cut through the noise of the market and pinpoint stocks that are genuinely undervalued or overvalued. These ratings take into account a stock’s price relative to Morningstar’s estimated intrinsic value. Stocks rated four or five stars are deemed undervalued, while three stars indicate fair value, and one or two stars imply overvaluation.
Current Stock Valuation Trends
As of February 13, the Morningstar US Market Index was down 1.29% over the previous week. Overall, the U.S. stock market appears slightly undervalued, trading at an 8% discount compared to fair value estimates based on market capitalization.
Among the 828 U.S.-listed stocks assessed by Morningstar analysts, the breakdown is as follows:
- 35% are undervalued, 39% are fairly valued, and 26% are overvalued.
- 22 stocks have recently become undervalued.
- 25 stocks are newly considered overvalued.
- Seven companies improved from a 4-star to a 5-star rating.
- Seven companies dropped from 5 stars to 4 stars.
- No newly undervalued stocks moved from a 3-star rating to a 5-star rating.
- 32 stocks are no longer classified as undervalued.
Indicators for This Week’s New 5-Star Stocks
Salesforce
- Morningstar Rating: ★★★★★
- Fair Value Estimate: $325.00
- Uncertainty Rating: High
Salesforce’s rating was upgraded from 4 to 5 stars despite a 0.85% decline over the past week. The stock has seen a significant drop of 20.96% in the last three months and 42.10% over the past year, but is currently trading at a 42% discount to its estimated fair value of $325 per share.
S&P Global
- Morningstar Rating: ★★★★★
- Fair Value Estimate: $570.00
- Uncertainty Rating: Low
S&P Global’s rating rose from 4 stars to 5 after a 6.77% decline last week. It has decreased 18.42% over three months and 23.93% over the year, trading at a 28% discount to its estimated fair value.
IQVIA
- Morningstar Rating: ★★★★★
- Fair Value Estimate: $268.00
- Uncertainty Rating: Medium
IQVIA’s rating improved after a 10.96% drop over the past week. The stock is down 25.32% in three months and 14.85% over the year, currently trading at a 38% discount to its estimated fair value.
Dassault Systèmes
- Morningstar Rating: ★★★★★
- Fair Value Estimate: $31.70
- Uncertainty Rating: Medium
Despite a substantial fall of 20.07% last week, Dassault’s stock is still rated 5 stars. It has dropped 24.87% over three months and 49.18% over the year, trading at a 34% discount from its new fair value estimate of $31.70.
Molina Healthcare
- Morningstar Rating: ★★★★★
- Fair Value Estimate: $262.00
- Uncertainty Rating: Very High
Molina’s rating also improved, with a slight gain of 2.76% last week, though it has decreased 2.26% over three months and nearly 50% over the past year. It’s now trading at a 48% discount to its estimated fair value.
