Once a month, we screen the Europe-listed stocks under Morningstar’s coverage for newly overvalued names—those whose prices have just climbed into ranges warranting 1- or 2-star
The five new 2-star European stocks with the largest market capitalization are:
The five new 1-star European stocks with the largest market capitalization are:
- Industria de Diseño Textil ITX
- Banco Santander SAN
- Anglo American AAL
- A.P. Moller - Maersk MAERSK B
- Swisscom SCMN
The full lists of new 2- and 1-star stocks can be found at the bottom of this story. 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 Europe Index rose 2.61% over the past month as of Aug. 17, leaving the overall European stock market slightly undervalued, hovering at a 4% discount to its fair value estimate on a market cap-weighted basis.
Of the 323 Europe-listed stocks covered by Morningstar analysts:
- 35% are undervalued, 44% are fairly valued, and 21% are overvalued.
- 10 are newly undervalued.
- 18 are newly overvalued.
- Six moved from a 2-star rating to a 1-star rating.
- Three moved from a 1-star rating to a 2-star rating.
- Among the newly overvalued stocks, zero jumped from a 3-star rating to a 1-star rating.
- 12 are no longer overvalued.
Metrics for This Month’s New 2-Star Stocks
Schneider Electric SU
- Morningstar Rating: ★★
- Fair Value Estimate: EUR 262
- Uncertainty Rating: Medium
Specialty industrial machinery firm Schneider Electric climbed 17.64% over the past month. The company’s stock is up 17.06% over the past three months and 42.10% over the past year. The stock’s fair value estimate rose to EUR 262 from EUR 250 during the month. It ended the month trading at an 18% premium to its new fair value estimate, with an Uncertainty Rating of Medium. The large-growth stock has a wide economic moat.
Rio Tinto RIO
- Morningstar Rating: ★★
- Fair Value Estimate: GBX 6,500
- Uncertainty Rating: Medium
Following a 8.26% gain over the past month, metals and mining firm Rio Tinto saw its Morningstar Rating move to 2 stars from 3. Rio Tinto has lost 6.24% over the past three months and has gained 65.86% over the past year. The large-value stock has no economic moat. Rio Tinto is trading at a 10% premium to its fair value estimate of GBX 6,500, with an Uncertainty Rating of Medium.
ING Group INGA
- Morningstar Rating: ★★
- Fair Value Estimate: EUR 25
- Uncertainty Rating: High
Diversified bank ING Group climbed 10.36% over the past month, bumping its Morningstar Rating to 2 stars from 3. The company’s stock is up 23.43% over the past three months and 52.58% over the past year. The stock’s price is 24% above its fair value estimate of EUR 25, with an Uncertainty Rating of High. The large-core stock has a narrow economic moat.
Equinor EQNR
- Morningstar Rating: ★★
- Fair Value Estimate: NOK 311
- Uncertainty Rating: High
Oil and gas firm Equinor gained 8.46% over the past month, shifting its Morningstar Rating to 2 stars from 3. Equinor has climbed 7.62% over the past three months and 64.13% over the past year. The stock is trading at a 25% premium to its fair value estimate of NOK 311, with an Uncertainty Rating of High. Equinor is a large-value company with no economic moat.
Atlas Copco ATCO A
- Morningstar Rating: ★★
- Fair Value Estimate: SEK 185
- Uncertainty Rating: Medium
Following a 6.29% gain over the past month, specialty industrial machinery firm Atlas Copco saw its Morningstar Rating move to 2 stars from 3. Atlas Copco has gained 20.22% over the past three months and 42.96% over the past year. The large-core stock has a wide economic moat. Atlas Copco is trading at a 12% premium to its fair value estimate of SEK 185, with an Uncertainty Rating of Medium.
Metrics for This Month’s New 1-Star Stocks
Industria de Diseño Textil ITX
- Morningstar Rating: ★
- Fair Value Estimate: EUR 41.50
- Uncertainty Rating: Medium
Retail company Industria de Diseño Textil gained 4.88% over the past month, shifting its Morningstar Rating to 1 star from 2. Industria de Diseño Textil has climbed 13.90% over the past three months and 34.18% over the past year. The stock is trading at a 36% premium to its fair value estimate of EUR 41.50, with an Uncertainty Rating of Medium. Industria de Diseño Textil is a large-core company with a narrow economic moat.
Banco Santander SAN
- Morningstar Rating: ★
- Fair Value Estimate: EUR 8
- Uncertainty Rating: High
Diversified bank Banco Santander climbed 7.40% over the past month, bumping its Morningstar Rating to 1 star from 2. The company’s stock is up 24.61% over the past three months and 57.81% over the past year. The stock’s price is 59% above its fair value estimate of EUR 8, with an Uncertainty Rating of High. The large-growth stock has a narrow economic moat.
Anglo American AAL
- Morningstar Rating: ★
- Fair Value Estimate: GBX 2,300
- Uncertainty Rating: High
Metals and mining firm Anglo American gained 15.53% over the past month, shifting its Morningstar Rating to 1 star from 2. Anglo American has climbed 2.48% over the past three months and 82.10% over the past year. The stock is trading at a 71% premium to its fair value estimate of GBX 2,300, with an Uncertainty Rating of High. Anglo American is a large-growth company with no economic moat.
A.P. Moller - Maersk MAERSK B
- Morningstar Rating: ★
- Fair Value Estimate: DKK 13,200
- Uncertainty Rating: High
Marine shipping firm A.P. Moller - Maersk climbed 27.39% over the past month. The company’s stock is up 47.19% over the past three months and 57.95% over the past year. The stock’s fair value estimate rose to DKK 13,200 from DKK 12,400 during the month. It ended the month trading at a 64% premium to its new fair value estimate, with an Uncertainty Rating of High. The large-value stock has no economic moat.
Swisscom SCMN
- Morningstar Rating: ★
- Fair Value Estimate: CHF 460
- Uncertainty Rating: Medium
Following a 0.16% loss over the past month, telecom services firm Swisscom saw its Morningstar Rating move to 1 star from 2. Swisscom has lost 6.36% over the past three months and has gained 13.78% over the past year. The large-value stock has no economic moat. Swisscom is trading at a 38% premium to its fair value estimate of CHF 460, with an Uncertainty Rating of Medium.
