Once a month, we screen the Canada-listed stocks under Morningstar’s coverage for newly overvalued names—those whose prices have just climbed into ranges warranting 1- or 2-star
The two new 2-star Canadian stocks, ordered by market capitalization, are:
The three new 1-star Canadian stocks, ordered by market capitalization, are:
All returns in this article 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 can help investors identify stocks that are truly undervalued or overvalued, cutting through the market noise. The rating is determined by three factors: a stock’s price, its
The Latest Stock Valuation Changes
The Morningstar Canada Index rose 1.51% over the past month as of July 14, leaving the overall Canadian stock market significantly overvalued, hovering at a 16% premium to its fair value estimate on a market-cap-weighted basis.
Of the 57 Canada-listed stocks covered by Morningstar analysts:
- 26% are undervalued, 19% are fairly valued, and 54% are overvalued.
- None are newly undervalued.
- Two are newly overvalued.
- Three moved from a 2-star rating to a 1-star rating.
- One moved from a 1-star rating to a 2-star rating.
- None of the newly overvalued stocks jumped from a 3-star rating to a 1-star rating.
- Two are no longer overvalued.
Metrics for This Month’s New 2-Star Stocks
Canadian National Railway CNR
- Morningstar Rating: ★★
- Fair Value Estimate: C$154.00
- Uncertainty Rating: Medium
Railroad Canadian National climbed 5.47% over the past month, bumping its Morningstar Rating to 2 stars from 3. The company’s stock is up 14.48% over the past three months and 26.43% over the past year. The stock’s price is 14% above its fair value estimate of C$154 per share, with an Uncertainty Rating of Medium. The large-core stock has a wide economic moat.
RB Global RBA
- Morningstar Rating: ★★
- Fair Value Estimate: C$140.00
- Uncertainty Rating: Medium
Following a 2.03% gain over the past month, specialty business services firm RB Global saw its Morningstar Rating move to 2 stars from 3. RB Global has gained 8.26% over the past three months and 3.42% over the past year. The mid-growth stock has a narrow economic moat. RB Global is trading at a 10% premium to its fair value estimate of C$140 per share, with an Uncertainty Rating of Medium.
Metrics for This Month’s New 1-Star Stocks
Royal Bank of Canada RY
- Morningstar Rating: ★
- Fair Value Estimate: C$235.00
- Uncertainty Rating: Low
Royal Bank ogained 7.89% over the past month, shifting its Morningstar Rating to 1 star from 2. Royal Bank has climbed 25.88% over the past three months and 71.66% over the past year. The stock is trading at a 28% premium to its fair value estimate of C$235 per share, with an Uncertainty Rating of Low. Royal Bank is a large-core company with a wide economic moat.
BMO Financial Group BMO
- Morningstar Rating: ★
- Fair Value Estimate: C$197.00
- Uncertainty Rating: Low
Following a 8.16% gain over the past month, diversified bank BMO Financial Group saw its Morningstar Rating move to 1 star from 2. BMO Financial Group has gained 25.59% over the past three months and 69.75% over the past year. The large-core stock has a narrow economic moat. BMO Financial Group is trading at a 29% premium to its fair value estimate of C$197, with an Uncertainty Rating of Low.
National Bank of Canada NA
- Morningstar Rating: ★
- Fair Value Estimate: C$164.00
- Uncertainty Rating: Low
National Bank climbed 10.33% over the past month, bumping its Morningstar Rating to 1 star from 2. The company’s stock is up 16.29% over the past three months and 67.81% over the past year. The stock’s price is 40% above its fair value estimate of C$164 per share, with an Uncertainty Rating of Low. The large-core stock has a narrow economic moat.
