Over
the
past
month,
a
total
of
18
stocks
dropped
into
undervalued
territory,
meaning
their
Morningstar
Ratings
changed
to
4
or
5
stars
over
the
course
of
the
month.
Stocks
rated
3
stars
are
fairly
valued
according
to
Morningstar
analysts,
while
those
rated
1
or
2
stars
are
considered
overvalued.
The
10
newly
undervalued
European
stocks
with
the
largest
market
capitalisation
are:
•
Hennes
&
Mauritz
(HM
B)
•
Carlsberg
(CARL
B)
•
Airbus
Group
(AIR)
•
Rio
Tinto
(RIO)
•
BP
(BP.)
•
ING
Group
(INGA)
•
BAE
Systems
(BA.)
•
Capgemini
(CAP)
•
NatWest
Group
(NWG)
•
Swiss
Life
Group
(SLHN)
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
July
12
The
Morningstar
Europe
Index
rose
0.42%
over
the
past
month,
leaving
the
overall
European
stock
market
slightly
undervalued,
hovering
at
a
2%
discount
to
its
fair
value
estimate
on
a
cap-weighted
basis.
Of
the
249
Europe-listed
stocks
covered
by
Morningstar
analysts:
•
51%
are
undervalued,
36%
are
fairly
valued,
and
14%
are
overvalued.
•
18
are
newly
undervalued.
•
Four
are
newly
overvalued.
•
Eight
moved
from
a
4-star
rating
to
a
5-star
rating.
•
Five
moved
from
a
5-star
rating
to
a
4-star
rating.
•
Four
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
the
stock’s
fair
value
estimate.
A
higher
uncertainty
rating
equates
to
a
larger
range
of
stock
prices
that
are
considered
fairly
valued.
These
two
metrics,
combined
with
the
current
stock
price,
are
used
to
determine
a
stock’s
Morningstar
Rating.
Metrics
for
this
Month’s
Newly
Undervalued
Stocks
Hennes
&
Mauritz
(HM
B)
•
Morningstar
Rating:
4
stars
•
1-Month
Return:
-6.39%
Apparel
manufacturing
company
Hennes
&
Mauritz
has
gained
8.10%
over
the
past
three
months
and
lost
0.70%
over
the
past
year.
The
large-core
stock
has
no
economic
moat.
Hennes
&
Mauritz
is
trading
at
a
8%
discount
to
its
fair
value
estimate
of
SEK
190.00,
with
a
medium
uncertainty
rating.
Carlsberg
(CARL
B)
•
Morningstar
Rating:
4
stars
•
1-Month
Return:
-9.45%
Alcoholic
beverages
company
Carlsberg
is
down
5.00%
over
the
past
three
months
and
12.89%
over
the
past
year.
The
stock’s
price
is
11%
below
its
fair
value
estimate
of
DKK
970.00,
with
a
medium
uncertainty
rating.
The
large-core
stock
has
no
economic
moat.
Airbus
Group
(AIR)
•
Morningstar
Rating:
4
stars
•
1-Month
Return:
-10.71%
Aerospace
and
defense
company
Airbus
has
dropped
16.69%
over
the
past
three
months
and
climbed
1.68%
over
the
past
year.
The
stock
is
trading
at
a
18%
discount
to
its
fair
value
estimate
of
€163.00,
with
a
medium
uncertainty
rating.
Airbus
is
a
large-growth
company
with
a
wide
economic
moat.
Rio
Tinto
(RIO)
•
Morningstar
Rating:
4
stars
•
1-Month
Return:
0.21%
Metals
and
mining
firm
Rio
Tinto
has
lost
2.14%
over
the
past
three
months
and
gained
9.59%
over
the
past
year.
The
large-value
stock
has
no
economic
moat.
Rio
Tinto’s
fair
value
estimate
rose
to
£59.00
from
£58.00
during
the
month.
It
ended
the
month
trading
at
a
11%
discount
to
its
new
fair
value
estimate,
with
a
medium
uncertainty
rating.
BP
(BP.)
•
Morningstar
Rating:
4
stars
•
1-Month
Return:
-2.45%
Oil
and
gas
firm
BP
has
dropped
14.90%
over
the
past
three
months
and
climbed
1.86%
over
the
past
year.
The
stock
is
trading
at
a
19%
discount
to
its
fair
value
estimate
of
560p,
with
a
high
uncertainty
rating.
BP
is
a
large-value
company
with
no
economic
moat.
ING
Group
(INGA)
•
Morningstar
Rating:
4
stars
•
1-Month
Return:
4.37%
The
bank
ING
has
gained
18.00%
over
the
past
three
months
and
40.89%
over
the
past
year.
The
large-value
stock
has
a
narrow
economic
moat.
ING’s
fair
value
estimate
rose
to
€20.00
from
€17.00
during
the
month.
It
ended
the
month
trading
at
a
16%
discount
to
its
new
fair
value
estimate,
with
a
high
uncertainty
rating.
BAE
Systems
(BA.)
•
Morningstar
Rating:
4
stars
•
1-Month
Return:
-8.68%
Aerospace
and
defense
company
BAE
Systems
is
down
2.45%
over
the
past
three
months
and
up
42.56%
over
the
past
year.
The
stock’s
price
is
15%
below
its
fair
value
estimate
of
£14.90,
with
a
medium
uncertainty
rating.
The
large-growth
stock
has
a
wide
economic
moat.
Capgemini
(CAP)
•
Morningstar
Rating:
4
stars
•
1-Month
Return:
0.55%
Information
technology
services
company
Capgemini
has
dropped
5.68%
over
the
past
three
months
and
climbed
11.74%
over
the
past
year.
The
stock
is
trading
at
an
8%
discount
to
its
fair
value
estimate
of
€210.00,
with
a
medium
uncertainty
rating.
Capgemini
is
a
large-core
company
with
a
narrow
economic
moat.
NatWest
(NWG)
•
Morningstar
Rating:
4
stars
•
1-Month
Return:
4.35%
Regional
bank
NatWest
Group
has
gained
17.89%
over
the
past
three
months
and
42.46%
over
the
past
year.
The
large-value
stock
has
no
economic
moat.
NatWest
Group’s
fair
value
estimate
rose
to
360p
from
280p
during
the
month.
It
ended
the
month
trading
at
a
10%
discount
to
its
new
fair
value
estimate,
with
a
medium
uncertainty
rating.
Swiss
Life
Group
(SLHN)
•
Morningstar
Rating:
4
stars
•
1-Month
Return:
6.25%
Insurance
firm
Swiss
Life
Group
is
up
14.59%
over
the
past
three
months
and
35.12%
over
the
past
year.
Swiss
Life
Group’s
fair
value
estimate
rose
to
CHF
770.00
from
CHF
690.00
during
the
month.
It
ended
the
month
trading
at
a
12%
discount
to
its
new
fair
value
estimate,
with
a
medium
uncertainty
rating.
The
large-core
stock
has
no
economic
moat.
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