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:
- Novartis NOVN
- Airbus Group AIR
- Banco Bilbao Vizcaya Argentaria BBVA
- Zurich Insurance Group ZURN
- Barclays BARC
The three new 1-star European stocks, ordered by market capitalization, are:
The full list of new 2-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 1.49% over the past month as of July 14, leaving the overall European stock market slightly undervalued, hovering at a 3% discount to its fair value estimate on a market cap-weighted basis.
Of the 322 Europe-listed stocks covered by Morningstar analysts:
- 37% are undervalued, 42% are fairly valued, and 20% are overvalued.
- Nine are newly undervalued.
- 16 are newly overvalued.
- Three moved from a 2-star rating to a 1-star rating.
- Four 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.
- Seven are no longer overvalued.
Metrics for This Month’s New 2-Star Stocks
Novartis NOVN
- Morningstar Rating: ★★
- Fair Value Estimate: CHF 109
- Uncertainty Rating: Medium
Drug manufacturer Novartis gained 0.28% over the past month, shifting its Morningstar Rating to 2 stars from 3. Novartis has climbed 1.78% over the past three months and 30.80% over the past year. The stock is trading at a 12% premium to its fair value estimate of CHF 109, with an Uncertainty Rating of Medium. Novartis is a large-core company with a wide economic moat.
Airbus Group AIR
- Morningstar Rating: ★★
- Fair Value Estimate: EUR 180
- Uncertainty Rating: Medium
Aerospace and defense company Airbus Group climbed 9.29% over the past month, bumping its Morningstar Rating to 2 stars from 3. The company’s stock is up 15.55% over the past three months and 9.08% over the past year. The stock’s price is 9% above its fair value estimate of EUR 180, with an Uncertainty Rating of Medium. The large-growth stock has a wide economic moat.
Banco Bilbao Vizcaya Argentaria BBVA
- Morningstar Rating: ★★
- Fair Value Estimate: EUR 18
- Uncertainty Rating: High
Following a 12.34% gain over the past month, diversified bank Banco Bilbao Vizcaya Argentaria saw its Morningstar Rating move to 2 stars from 3. Banco Bilbao Vizcaya Argentaria has gained 12.46% over the past three months and 82.19% over the past year. The large-core stock has a narrow economic moat. Banco Bilbao Vizcaya Argentaria is trading at a 25% premium to its fair value estimate of EUR 18, with an Uncertainty Rating of High.
Zurich Insurance Group ZURN
- Morningstar Rating: ★★
- Fair Value Estimate: CHF 550
- Uncertainty Rating: Low
Diversified insurance firm Zurich Insurance Group climbed 8.83% over the past month, bumping its Morningstar Rating to 2 stars from 3. The company’s stock is up 11.04% over the past three months and 16.83% over the past year. The stock’s price is 12% above its fair value estimate of CHF 550, with an Uncertainty Rating of Low. The large-core stock has a narrow economic moat.
Barclays BARC
- Morningstar Rating: ★★
- Fair Value Estimate: GBX 435
- Uncertainty Rating: High
Diversified bank Barclays gained 9.95% over the past month, shifting its Morningstar Rating to 2 stars from 3. Barclays has climbed 17.37% over the past three months and 54.21% over the past year. The stock is trading at a 20% premium to its fair value estimate of GBX 435, with an Uncertainty Rating of High. Barclays is a large-core company with no economic moat.
Metrics for This Month’s New 1-Star Stocks
DHL Group DHL
- Morningstar Rating: ★
- Fair Value Estimate: EUR 40
- Uncertainty Rating: Medium
Following a 10.63% gain over the past month, integrated freight and logistics firm DHL Group saw its Morningstar Rating move to 1 star from 2. DHL Group has gained 22.09% over the past three months and 53.14% over the past year. The large-value stock has a narrow economic moat. DHL Group is trading at a 43% premium to its fair value estimate of EUR 40, with an Uncertainty Rating of Medium.
Sandvik SAND
- Morningstar Rating: ★
- Fair Value Estimate: SEK 245
- Uncertainty Rating: High
Specialty industrial machinery firm Sandvik climbed 3.22% over the past month, bumping its Morningstar Rating to 1 star from 2. The company’s stock is down 0.66% over the past three months and is up 74.26% over the past year. The stock’s price is 60% above its fair value estimate of SEK 245, with an Uncertainty Rating of High. The large-growth stock has a wide economic moat.
Salvatore Ferragamo SFER
- Morningstar Rating: ★
- Fair Value Estimate: EUR 6.40
- Uncertainty Rating: High
Following a 5.77% gain over the past month, luxury goods firm Salvatore Ferragamo saw its Morningstar Rating move to 1 star from 2. Salvatore Ferragamo has gained 30.32% over the past three months and 95.92% over the past year. The small-growth stock has no economic moat. Salvatore Ferragamo is trading at a 57% premium to its fair value estimate of EUR 6.40, with an Uncertainty Rating of High.
