8 Newly Overvalued Stocks This Week — Bank of America & Caterpillar Lead the Pack
Overview
Morningstar analysts have identified eight U.S.-listed stocks that have become newly overvalued as of October 17, 2025.
This weekly update highlights stocks that recently moved into the 1-star or 2-star rating range, signaling that they are now trading above their fair value estimates and may be considered expensive relative to their intrinsic worth.
Quick Refresher: Morningstar Star Ratings
Morningstar’s star rating system is based on three major factors:
1. Fair Value Estimate — the intrinsic worth of a stock.
2. Market Price — the current trading price.
3. Uncertainty Rating — the level of confidence in that fair value estimate.
⭐️ 4–5 stars: Undervalued (buying opportunities)
⭐️⭐️⭐️ 3 stars: Fairly valued
⭐️⭐️ 2 stars: Overvalued
⭐️ 1 star: Highly overvalued
Market Context
• The Morningstar U.S. Market Index gained 1.7% last week.
• The market overall is now moderately overvalued, trading 6% above fair value.
• Out of 838 U.S. stocks covered:
• 36% are undervalued
• 39% are fairly valued
• 25% are overvalued
• 8 stocks became newly overvalued, while 13 became newly undervalued.
The 5 Newly Overvalued 2-Star Stocks
Below are the most notable names that moved from 3-star to 2-star (overvalued) status this week:
1️⃣ Bank of America (BAC)
• Fair Value Estimate: $46
• Uncertainty Rating: Medium
• Recent Performance:
• +5.41% (past week)
• +9.67% (3 months)
• +23.20% (1 year)
• Premium to Fair Value: 11%
Despite a wide economic moat and strong fundamentals, BAC’s price now looks stretched compared to intrinsic value.
2️⃣ Caterpillar (CAT)
• Fair Value Estimate: $477
• Uncertainty Rating: Medium
• Recent Performance:
• +7.28% (past week)
• +26.54% (3 months)
• +35.73% (1 year)
• Premium to Fair Value: 10%
The heavy machinery giant’s strong rally puts it in overvalued territory — though it remains a dominant player globally.
3️⃣ NextEra Energy (NEE)
• Fair Value Estimate: $75
• Uncertainty Rating: Medium
• Recent Performance:
• +1.42% (past week)
• +13.32% (3 months)
• +4.04% (1 year)
• Premium to Fair Value: 13%
This top U.S. renewable energy company continues to climb but now trades above its fair value, making it pricey for new investors.
4️⃣ Monolithic Power Systems (MPWR)
• Fair Value Estimate: $840
• Uncertainty Rating: High
• Recent Performance:
• +11.08% (past week)
• +41.03% (3 months)
• +10.37% (1 year)
• Premium to Fair Value: 20%
The semiconductor stock’s strong run puts it in overvalued range — with high volatility and a wide moat.
5️⃣ Mettler-Toledo International (MTD)
• Fair Value Estimate: $1,200
• Uncertainty Rating: Medium
• Recent Performance:
• +5.94% (past week)
• +11.91% (3 months)
• -1.09% (1 year)
• Premium to Fair Value: 12%
This diagnostics and lab equipment firm has rebounded modestly, but the current price now exceeds fair value estimates.
⚠️ The Newly Overvalued 1-Star Stock
Freeport-McMoRan (FCX)
• Fair Value Estimate: $25 (cut from $27)
• Uncertainty Rating: High
• Recent Performance:
• +1.10% (past week)
• -7.04% (3 months)
• -12.80% (1 year)
• Premium to Fair Value: 65%
Despite lackluster performance, the copper giant’s valuation looks highly inflated. It now trades far above intrinsic value and carries no economic moat.
Investor Takeaways
✅ Rising prices have pushed several large-cap names into overvalued territory — signaling possible caution for new entries.
✅ High-quality doesn’t always mean undervalued — even strong companies can become too expensive.
✅ Freeport-McMoRan’s downgrade to 1-star highlights the risks of holding cyclical commodities during market upswings.
✅ Investors should re-evaluate exposure to these names and consider rotating into undervalued 4–5 star stocks instead.
Final Thought
While momentum remains strong in the U.S. market, valuation discipline is key. As Morningstar reminds investors — even great companies can become poor investments at the wrong price.
Overview
Morningstar analysts have identified eight U.S.-listed stocks that have become newly overvalued as of October 17, 2025.
This weekly update highlights stocks that recently moved into the 1-star or 2-star rating range, signaling that they are now trading above their fair value estimates and may be considered expensive relative to their intrinsic worth.
Quick Refresher: Morningstar Star Ratings
Morningstar’s star rating system is based on three major factors:
1. Fair Value Estimate — the intrinsic worth of a stock.
2. Market Price — the current trading price.
3. Uncertainty Rating — the level of confidence in that fair value estimate.
⭐️ 4–5 stars: Undervalued (buying opportunities)
⭐️⭐️⭐️ 3 stars: Fairly valued
⭐️⭐️ 2 stars: Overvalued
⭐️ 1 star: Highly overvalued
Market Context
• The Morningstar U.S. Market Index gained 1.7% last week.
• The market overall is now moderately overvalued, trading 6% above fair value.
• Out of 838 U.S. stocks covered:
• 36% are undervalued
• 39% are fairly valued
• 25% are overvalued
• 8 stocks became newly overvalued, while 13 became newly undervalued.
The 5 Newly Overvalued 2-Star Stocks
Below are the most notable names that moved from 3-star to 2-star (overvalued) status this week:
1️⃣ Bank of America (BAC)
• Fair Value Estimate: $46
• Uncertainty Rating: Medium
• Recent Performance:
• +5.41% (past week)
• +9.67% (3 months)
• +23.20% (1 year)
• Premium to Fair Value: 11%
Despite a wide economic moat and strong fundamentals, BAC’s price now looks stretched compared to intrinsic value.
2️⃣ Caterpillar (CAT)
• Fair Value Estimate: $477
• Uncertainty Rating: Medium
• Recent Performance:
• +7.28% (past week)
• +26.54% (3 months)
• +35.73% (1 year)
• Premium to Fair Value: 10%
The heavy machinery giant’s strong rally puts it in overvalued territory — though it remains a dominant player globally.
3️⃣ NextEra Energy (NEE)
• Fair Value Estimate: $75
• Uncertainty Rating: Medium
• Recent Performance:
• +1.42% (past week)
• +13.32% (3 months)
• +4.04% (1 year)
• Premium to Fair Value: 13%
This top U.S. renewable energy company continues to climb but now trades above its fair value, making it pricey for new investors.
4️⃣ Monolithic Power Systems (MPWR)
• Fair Value Estimate: $840
• Uncertainty Rating: High
• Recent Performance:
• +11.08% (past week)
• +41.03% (3 months)
• +10.37% (1 year)
• Premium to Fair Value: 20%
The semiconductor stock’s strong run puts it in overvalued range — with high volatility and a wide moat.
5️⃣ Mettler-Toledo International (MTD)
• Fair Value Estimate: $1,200
• Uncertainty Rating: Medium
• Recent Performance:
• +5.94% (past week)
• +11.91% (3 months)
• -1.09% (1 year)
• Premium to Fair Value: 12%
This diagnostics and lab equipment firm has rebounded modestly, but the current price now exceeds fair value estimates.
⚠️ The Newly Overvalued 1-Star Stock
Freeport-McMoRan (FCX)
• Fair Value Estimate: $25 (cut from $27)
• Uncertainty Rating: High
• Recent Performance:
• +1.10% (past week)
• -7.04% (3 months)
• -12.80% (1 year)
• Premium to Fair Value: 65%
Despite lackluster performance, the copper giant’s valuation looks highly inflated. It now trades far above intrinsic value and carries no economic moat.
Investor Takeaways
✅ Rising prices have pushed several large-cap names into overvalued territory — signaling possible caution for new entries.
✅ High-quality doesn’t always mean undervalued — even strong companies can become too expensive.
✅ Freeport-McMoRan’s downgrade to 1-star highlights the risks of holding cyclical commodities during market upswings.
✅ Investors should re-evaluate exposure to these names and consider rotating into undervalued 4–5 star stocks instead.
Final Thought
While momentum remains strong in the U.S. market, valuation discipline is key. As Morningstar reminds investors — even great companies can become poor investments at the wrong price.