New 4-Star Stocks

Each week, we screen the US-listed stocks under Morningstar’s coverage for newly undervalued names.

For the week ended Sept. 6, a total of 18 stocks dropped into undervalued territory, meaning their Morningstar Ratings changed to 4 or 5 stars. Stocks rated 3 stars are fairly valued according to Morningstar analysts, while those rated 1 or 2 stars are considered overvalued.

The 10 newly undervalued stocks with the largest market capitalization are:

• ASML ASML
• Micron Technology MU
• Equinor EQNR
• Air Products and Chemicals APD
• ON Semiconductor ON
• Devon Energy DVN
• Zscaler ZS
• Okta OKTA
• DocuSign DOCU
• Qorvo QRVO

All data in this article is sourced from Morningstar Direct.

New 4-Star Stocks for the Week Ended Sept. 6

The Morningstar US Market Index fell 4.32% over the past week, leaving the overall US stock market slightly overvalued, hovering at a 2% premium to its fair value estimate on a cap-weighted basis.

Of the 882 US-listed stocks covered by Morningstar analysts:

• 36% are undervalued, 43% are fairly valued, and 21% are overvalued.
• 18 are newly undervalued.
• Two are newly overvalued.
• None moved from a 4-star rating to a 5-star rating.
• One moved from a 5-star rating to a 4-star rating.
• 12 are no longer undervalued.

Morningstar analysts assign every stock under their coverage a fair value estimate, an intrinsic measure of its worth, and an uncertainty rating, which captures the range of potential outcomes for that estimate. A higher uncertainty rating equates to a larger range of stock prices that are considered fairly valued. These two metrics and the current stock price are used to determine a stock’s Morningstar Rating.

Metrics for this Week’s New 4-Star Stocks

ASML

• Morningstar Rating: 4 stars
• One-Week Return: -16.71%

Semiconductor equipment and materials firm ASML has lost 28.35% over the past three months and gained 13.96% over the past year. The large-growth stock has a wide economic moat. ASML is trading at a 24% discount to its fair value estimate of $990, with a high uncertainty rating.

Micron Technology

• Morningstar Rating: 4 stars
• One-Week Return: -10.25%

Semiconductor company Micron is down 33.53% over the past three months and up 23.28% over the past year. The stock’s price is 21% below its fair value estimate of $110, with a high uncertainty rating. The large-value stock has no economic moat.

Equinor

• Morningstar Rating: 4 stars
• One-Week Return: -7.29%

Oil and gas firm Equinor has lost 8.58% over the past three months and 12.18% over the past year. The large-value stock has no economic moat. Equinor is trading at an 18% discount to its fair value estimate of $30.50, with a high uncertainty rating.

Air Products and Chemicals

• Morningstar Rating: 4 stars
• One-Week Return: -3.64%

Specialty chemicals company Air Products and Chemicals has climbed 0.34% over the past three months and dropped 5.90% over the past year. The stock is trading at a 13% discount to its fair value estimate of $309, with a medium uncertainty rating. Air Products and Chemicals is a large-value company with a wide economic moat.

ON Semiconductor

• Morningstar Rating: 4 stars
• One-Week Return: -12.78%

Semiconductor company ON is down 6.25% over the past three months and 31.73% over the past year. The stock’s price is 21% below its fair value estimate of $86, with a high uncertainty rating. The mid-core stock has a narrow economic moat.

Devon Energy

• Morningstar Rating: 4 stars
• One-Week Return: -7.68%

Oil and gas exploration and production company Devon has dropped 10.91% over the past three months and 19.29% over the past year. The stock is trading at a 14% discount to its fair value estimate of $48, with a medium uncertainty rating. Devon is a mid-value company with a narrow economic moat.

Zscaler

• Morningstar Rating: 4 stars
• One-Week Return: -21.60%

Software infrastructure firm Zscaler has lost 12.38% over the past three months and 0.99% over the past year. The mid-growth stock has a narrow economic moat. Zscaler is trading at a 26% discount to its fair value estimate of $213, with a high uncertainty rating.

Okta

• Morningstar Rating: 4 stars
• One-Week Return: -7.98%

Software infrastructure firm Okta is down 17.38% over the past three months and 17.20% over the past year. The stock’s price is 28% below its fair value estimate of $100, with a very high uncertainty rating. The mid-growth stock has no economic moat.

DocuSign

• Morningstar Rating: 4 stars
• One-Week Return: -0.03%

Software application firm DocuSign has gained 8.41% over the past three months and 12.14% over the past year. The mid-growth stock has no economic moat. DocuSign’s fair value estimate rose to $70 from $65 during the week. It ended the week trading at a 15% discount to its new fair value estimate, with a high uncertainty rating.

Qorvo

• Morningstar Rating: 4 stars
• One-Week Return: -9.96%

Semiconductor company Qorvo is up 4.37% over the past three months and down 1.78% over the past year. The stock’s price is 18% below its fair value estimate of $128, with a high uncertainty rating. The mid-core stock has no economic moat.

Newly Undervalued Stocks for the Week