New 4-Star Stocks
DraftKings and Light & Wonder are among the stocks that fell into undervalued territory.
Each week, we screen the US-listed stocks under Morningstar’s coverage for newly undervalued names.
For the week ended Oct. 4, three 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.
Those three newly undervalued stocks, ordered by market cap, are:
All data in this article is sourced from Morningstar Direct.
New 4-Star Stocks for the Week Ended Oct. 4
The Morningstar US Market Index rose 0.24% over the past week, leaving the overall US stock market moderately overvalued, hovering at an 8.00% premium to its fair value estimate on a cap-weighted basis.
Of the 884 US-listed stocks covered by Morningstar analysts:
- 30% are undervalued, 43% are fairly valued, and 27% are overvalued.
- Three are newly undervalued.
- 11 are newly overvalued.
- Three moved from a 4-star rating to a 5-star rating.
- Four moved from a 5-star rating to a 4-star rating.
- 11 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 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 stock’s price determine its Morningstar Rating.
Metrics for this Week’s New 4-Star Stocks
DraftKings
- Morningstar Rating: 4 stars
- One-Week Return: -2.68%
Gambling company DraftKings has climbed 4.91% over the past three months and 37.06% over the past year. The stock trades at a 20% discount to its fair value estimate of $49, with a very high uncertainty rating. DraftKings is a mid-growth company with a narrow economic moat.
Light & Wonder
- Morningstar Rating: 4 stars
- One-Week Return: 1.09%
Gambling company Light & Wonder is down 10.32% over the past three months and up 35.58% over the past year. The stock’s price is 10% below its fair value estimate of $104, with a medium uncertainty rating. The small-growth stock has no economic moat.
AmeriCold Logistics
- Morningstar Rating: 4 stars
- One-Week Return: -2.82%
Industrial REIT AmeriCold has gained 5.72% over the past three months and lost 2.94% over the past year. The small-core stock has no economic moat. AmeriCold is trading at a 12% discount to its fair value estimate of $31.50, with a medium uncertainty rating.
This article was generated with the help of automation and reviewed by Morningstar editors. Learn more about Morningstar’s use of automation.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.