New 4-Star Stocks

For the week ended Sept. 20, 2024, a total of four stocks dropped into undervalued territory, meaning their Morningstar Ratings changed to 4 or 5 stars over the week. Stocks rated 3 stars are fairly valued, according to Morningstar analysts, while those rated 1 or 2 stars are considered overvalued.

The four newly undervalued stocks, ordered by market cap, are:

• Adobe ADBE
• Mitsubishi UFJ Financial Group MUFG
• Altria Group MO
• BioMarin Pharmaceutical BMRN

All data in this article is sourced from Morningstar Direct.

New 4-Star Stocks for the Week Ended Sept. 20

The Morningstar US Market Index rose 1.52% last week, leaving the overall US stock market moderately overvalued, hovering at a 6% premium to its fair value estimate on a cap-weighted basis.

Of the 881 US-listed stocks covered by Morningstar analysts:

• 33% are undervalued, 42% are fairly valued, and 25% are overvalued.
• Four are newly undervalued.
• 26 are newly overvalued.
• One moved from a 4-star rating to a 5-star rating.
• Four moved from a 5-star rating to a 4-star rating.
• 20 are no longer undervalued.

Morningstar analysts assign every stock under their coverage a fair value estimate, which is an intrinsic measure of the stock’s worth, and a Morningstar Uncertainty Rating, which captures the range of potential outcomes for the stock’s fair value estimate. A higher Uncertainty Rating equates to a larger range of stock prices that are considered fairly valued.

These two metrics, combined with the current stock price, are used to determine a stock’s Morningstar Rating.

Metrics for This Week’s New 4-Star Stocks

Adobe

• Morningstar Rating: 4 stars
• One-Week Return: Negative 2.71%

Software infrastructure firm Adobe has lost 0.12% over the past three months and 2.52% over the past year. The large-core stock has a wide Morningstar Economic Moat Rating. Adobe is trading at an 18% discount to its fair value estimate of $635 per share and has a High Uncertainty Rating.

Mitsubishi UFJ Financial Group

• Morningstar Rating: 4 stars
• One-Week Return: 0.68%

Diversified bank Mitsubishi UFJ Financial Group is up 6.64% over the past three months and 23.00% over the past year. Mitsubishi UFJ Financial Group’s fair value estimate rose to $12.25 per share from $11.25 during the week. It ended the week trading at a 15% discount to its new fair value estimate and a Medium Uncertainty Rating. The large-core stock has no economic moat.

Altria Group

• Morningstar Rating: 4 stars
• One-Week Return: Negative 2.98%

Tobacco company Altria Group has gained 13.11% over the past three months and 27.84% over the past year. The large-value stock has a wide economic moat. Altria Group is trading at a 13% discount to its fair value estimate of $58 per share with a Medium Uncertainty Rating.

BioMarin Pharmaceutical

• Morningstar Rating: 4 stars
• One-Week Return: Negative 16.74%

Biotechnology firm BioMarin Pharmaceutical is down 16.55% over the past three months and 20.02% over the past year. BioMarin Pharmaceutical’s fair value estimate was cut to $83 from $87 during the week. It ended the week trading at a 15% discount to its new fair value estimate, and it has a High Uncertainty Rating. The mid-growth stock has a narrow economic moat.

Newly Undervalued Stocks for the Week