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Each week, we evaluate US-listed stocks within Morningstar’s coverage to identify newly overvalued stocks—those whose prices have recently risen into 1- or 2-star Morningstar Ratings. For the week ending Dec. 12, 14 stocks were rated at 2 stars, while no new stocks joined the 28 US-listed stocks in the 1-star category.
The five newly rated 2-star stocks with the highest market capitalizations are:
- Chubb Group Holdings CB
- FedEx FDX
- Seagate Technology STX
- Teva Pharmaceutical Industries TEVA
- Fox FOXA
A complete list of the newly rated 2-star stocks is available at the end of this article. All returns 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 assists investors in identifying stocks that are either undervalued or overvalued, allowing them to sift through market noise. The rating is based on three criteria: a stock’s market price, its fair value estimate—Morningstar’s assessment of its intrinsic worth—and its Uncertainty Rating, indicating the potential variability of that estimate. Stocks rated 4 or 5 stars are viewed as undervalued, while those rated 3 stars are fairly valued, and 1- or 2-star stocks are considered overvalued.
The Latest Stock Valuation Changes
As of Dec. 12, the Morningstar US Market Index decreased by 0.53% over the past week, leaving the overall US stock market slightly overvalued, at a 1% premium to its fair value estimate on a market cap-weighted basis.
Among the 830 US-listed stocks monitored by Morningstar analysts:
- 36% are undervalued, 41% fairly valued, and 23% overvalued.
- Seven stocks are newly classified as undervalued.
- Fourteen stocks are newly classified as overvalued.
- Zero moved from a 2-star to a 1-star rating.
- Two transitioned from a 1-star to a 2-star rating.
- No newly overvalued stocks upgraded from a 3-star to a 1-star rating.
- Seven stocks are no longer considered overvalued.
Metrics for This Week’s New 2-Star Stocks
Chubb Group Holdings
- Morningstar Rating: ★★
- Fair Value Estimate: $267.00
- Uncertainty Rating: Medium
Chubb, a property and casualty insurance company, saw its rating adjust to 2 stars from 3 after a 4.89% gain in the past week. The stock is up 11.27% over the last three months and 13.87% over the past year, trading at a 16% premium over its fair value estimate of $267 per share, with a Medium Uncertainty Rating.
FedEx
- Morningstar Rating: ★★
- Fair Value Estimate: $239.00
- Uncertainty Rating: High
FedEx, an integrated freight and logistics company, experienced a 3.66% rise, prompting its rating change to 2 stars from 3. The stock has increased by 23.87% in three months and 2.08% over the past year, trading at a 19% premium relative to its $239 fair value estimate with a High Uncertainty Rating.
Seagate Technology
- Morningstar Rating: ★★
- Fair Value Estimate: $250.00
- Uncertainty Rating: High
Seagate Technology, a computer hardware company, also shifted to a 2-star rating after a 3.17% increase in the past week. The stock has surged 47.21% in three months and 201.68% over the past year, currently trading at a 15% premium to its fair value estimate of $250, with a High Uncertainty Rating.
Teva Pharmaceutical Industries
- Morningstar Rating: ★★
- Fair Value Estimate: $25.00
- Uncertainty Rating: High
Teva Pharmaceutical, a drug manufacturer, saw a rating adjustment to 2 stars after a 4.67% increase in stock price. It has gained 49.47% over the last three months and 77.22% over the past year, trading at a 19% premium to its $25 fair value estimate, with a High Uncertainty Rating.
Fox
- Morningstar Rating: ★★
- Fair Value Estimate: $60.00
- Uncertainty Rating: High
Finally, the entertainment company Fox received a 2-star rating after a 3.95% increase. Stock performance reflects a 22.06% rise in three months and a 51.61% increase over the past year, trading at a 19% premium to the $60 fair value estimate, classified with a High Uncertainty Rating.
This article was generated with the help of automation and reviewed by Morningstar editors.
Learn more about Morningstar’s use of automation.
