Each month, we screen the Europe-listed stocks under Morningstar’s coverage for newly undervalued names.
Stocks with a Morningstar Rating of 4 or 5 stars are considered undervalued. Over the past month, nine stocks saw their Morningstar Ratings change to 4 stars, while another two dropped into 5-star territory. Stocks rated 3 stars are fairly valued according to Morningstar analysts while those rated 1 or 2 stars are considered overvalued.
The five new 4-star European stocks with the largest market capitalization are:
The two new 5-star European stocks, ordered by market capitalization, are:
The full list of new 4-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.
Newly Undervalued Stocks as of June 16
The Morningstar Europe Index rose 0.04% over the past month, leaving the overall European stock market slightly undervalued, hovering at a 4% discount to its fair value estimate on a cap-weighted basis.
Of the 300 Europe-listed stocks covered by Morningstar analysts:
• 41% are undervalued, 40% are fairly valued, and 18% are overvalued.
• Nine are newly undervalued.
• Four are newly overvalued.
• Two moved from a 4-star rating to a 5-star rating.
• Six moved from a 5-star rating to a 4-star rating.
• Among the newly undervalued stocks, zero jumped from a 3-star rating to a 5-star rating.
• 14 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 prices considered fairly valued.
These two metrics and the stock’s current price, are used to determine its Morningstar Rating.
Metrics for This Month’s New 4-Star Stocks
Unilever ULVR
- Morningstar Rating: ★★★★
- One-Month Return: 0.15%
Household and personal products company Unilever is up 2.89% over the past three months and 7.54% over the past year. The fair value estimate for Unilever rose to GBX 4,940 from GBX 4,750 during the month. It ended the month trading at a 6% discount to its new fair value estimate, with an Uncertainty Rating of Low. The large-core stock has a wide economic moat.
BAE Systems BA.
- Morningstar Rating: ★★★★
- One-Month Return: 9.39%
Aerospace and defense company BAE Systems has gained 17.75% over the past three months and 47.54% over the past year. The large-growth stock has a wide economic moat. The fair value estimate for BAE Systems rose to GBX 2,250 from GBX 1,550 during the month. It ended the month trading at a 14% discount to its new fair value estimate, with an Uncertainty Rating of Medium.
Atlas Copco ATCO A
- Morningstar Rating: ★★★★
- One-Month Return: -6.59%
Specialty industrial machinery firm Atlas Copco has dropped 12.34% over the past three months and 21.82% over the past year. The fair value estimate for Atlas Copco rose to SEK 175 from SEK 150 during the month. It ended the month trading at a 12% discount to its new fair value estimate, with an Uncertainty Rating of Medium. Atlas Copco is a large-core company with a wide economic moat.
Partners Group PGHN
- Morningstar Rating: ★★★★
- One-Month Return: -10.75%
Asset management firm Partners Group has lost 19.78% over the past three months and 8.59% over the past year. The large-growth stock has a narrow economic moat. Partners Group is trading at an 18% discount to its fair value estimate of CHF 1,240, with an Uncertainty Rating of High.
Amundi AMUN
- Morningstar Rating: ★★★★
- One-Month Return: -2.16%
Asset management firm Amundi has dropped 0.81% over the past three months and has climbed 18.79% over the past year. The stock is trading at an 18% discount to its fair value estimate of EUR 82, with an Uncertainty Rating of High. Amundi is a large-value company with a narrow economic moat.
Metrics for This Month’s New 5-Star Stocks
Diageo DGE
- Morningstar Rating: ★★★★★
- One-Month Return: -11.43%
Alcoholic beverages company Diageo is down 7.72% over the past three months and 23.58% over the past year. The stock’s price is 26% below its fair value estimate of GBX 2,590, with an Uncertainty Rating of Low. The large-value stock has a wide economic moat.
Philips PHIA
- Morningstar Rating: ★★★★★
- One-Month Return: -8.12%
Medical devices company Philips has lost 15.89% over the past three months and 14.70% over the past year. The large-core stock has a wide economic moat. Philips is trading at a 43% discount to its fair value estimate of EUR 35, with an Uncertainty Rating of High.
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.
