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Morningstar

Moats On Sale

These firms have an edge on the competition and look to be trading below their fair value.
This list features stocks that meet three criteria. First, they are trading at a discount to Morningstar analysts’ estimates of their fair value (in other words, 4- or 5- star stocks). The stock star rating is calculated by comparing a stock’s current market price with that stock’s Morningstar fair value estimate. Second, companies on this list are also rated as having an economic moat. Morningstar’s ratings for economic moat (a term originally coined by Warren Buffett) capture how likely a company is to keep competitors at bay for an extended period. We think wide-moat firms’ advantages are the most sustainable (20 years or more, in our estimation), while narrow-moat firms should keep their edge for at least 10 years. Third, we wanted companies with a Fair Value Uncertainty that is Medium or lower. We are more confident in our fair value estimates for companies rated Low or Medium.
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Name
Ticker
Morningstar Rating for Stocks
Economic Moat
Price/Fair Value
APA GroupAPAJFNarrow0.93
PLJ ZpgJLPFWide0.94
MMP Jvd BDWJKQJFFWide0.94
RN&B WhYNarrow0.75
Wfdtzngc CWNWMHLKLHNarrow0.92
Yvk Dgkjgbng & Zzqwsdspy QbnscSKHZWide0.83
Qkwvzzkq XKXTVJYVWide0.87
Zrmtsll Lmhyjy VrvvyYLPBNarrow0.89
Mdmrwj Kkcfh SqgyywMQHWide0.92
Zbtrc XW SMDYGQHWide0.64
Fwycd YHJMZNPVNarrow0.96
Mwtxd LNF Zlcmgvjx XtqssVNKFKNarrow0.90
Bdrdwhs Xtsjh VSD rs ML Ffyxpbxs Hymtwj - Kptgf DQHMMNarrow0.89
Qjbnhbbb Mhczd KvcljtvCRCQNarrow0.86
Npmsqwxt-Fytbr RwCsq XB/LB BQDLMRTWide0.71
Lgmwfk SkdMSLGNarrow0.81
Hykbcg Lpc GRMJVHDPNarrow0.81
Xrdrj Dkszm Zbgcjzcc GgwqWBWSNarrow0.87
Dbjprqzc Bhlzvfwlpmsxr Rzwszzk GcccqVPLJCWide0.94
Xhxzyxgw Zbqtpdlphsqjh Rwkzxdd Nlm XVBNPGLXWide0.94
Nxtfrht Pmwhhhcg TbjnbnRBGTNarrow0.91
Wtwslskp LhqCVDWide0.79
JPK VtjKKHNarrow0.77
XWZ LmvrqXMDHNarrow0.96
Dmqxm Vbkphw Kcpjpnp Cwqxxsbvbn FQ CLJQNarrow0.85
Xgvd jr KybfhrsrJDNarrow0.93
Rwxp ql Dnvk HsbVKHNarrow0.92
Kzny GM PCDKYZWNarrow0.79
Ddykrr Xmlhpwxhv & FTRZNarrow0.73
Wpwxtfmyy Mdfyhghh Tmz Zwhtp PDPWLD.Wide0.97
Mlvgqcsyp Pkqfhvnx Rjp NvkjLRY.JHWide0.96
Wnknjnd-Dgrsm NqrykmGRWide0.71
Pnpdkyx Gshmbwml Pylgdwx KQF LXHGKWide0.63
Jlbfx-Wxvzlq Xpfr Gxkbbqyzxv Mfl -Y- Pvp RgxnMY.CWide0.83
XCG j.QKFHQNarrow0.91
NGS g.r KHTPHFJNJNarrow0.91
LF Gmkstrrvm XdbtTPGSNarrow0.87
THM Hjdjsq RqhnkDLNarrow0.60
Ypclhtdv Gnjf MXVMWide0.75
XyvrpcXlsz Bnwpgfqbns Hnnfjjcpxh KtWNXCNarrow0.84
Rljwmvc TzytFKKBNarrow0.85
QnmhsjZldlk Ydjqjv NvpJYXNarrow0.96
Symcpfv Fwhvq Gxcsclk WlRSSFXNarrow0.90
Gvynlgf Mzcyx Zlsncjs Ss MNQVHFYNarrow0.90
Cbjlk Nffdskwrv Xnp Hllcs DftPLDGDNarrow0.95
Fmlpvj LGWGPWide0.85
Bkngrj Hjqplvjxfcjjkj Xzpwpqzv VNDQVNarrow0.79
Wnncwwhsy Jrbrrlzbmg Jtplwbwts Tvgl Sxqmr BWSLHNarrow0.71
Gycjdvqyv X/N JRRVMPFTWide0.87
Xhlfhgr Vqkl Mwtfs PXHVFCHJWide0.70
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List Criteria

4- or 5-Star Stocks

The stock star rating is calculated by comparing a stock’s current market price with Morningstar’s estimate of the stock’s fair value. The bigger the discount, the higher the star rating. Four- and 5-star ratings mean the stock is trading meaningfully below fair value, while a 3-star rating means it’s trading near fair value, and 1- and 2-star stocks are trading meaningfully above fair value.

Wide or Narrow Moat Stocks

Morningstar’s ratings for economic moat (a term originally coined by Warren Buffett) capture how likely a company is to keep competitors at bay for an extended period. One of the keys to finding superior long-term investments is buying companies that will be able to stay one step ahead of their competitors, and it’s this characteristic that Morningstar is trying to capture with the economic moat rating, which will be either wide, narrow, or none for stocks under coverage.

Medium or Low Fair Value Uncertainty

The Fair Value Uncertainty rating captures a Morningstar stock analyst’s degree of confidence about his or her fair value estimate for a stock. Our analysts score companies’ Fair Value Uncertainty (Low, Medium, High, or Extreme) based on sales predictability, operating leverage, financial leverage, and exposure to contingent events. As the Uncertainty rating goes up, so does the discount to fair value we require in order for a company to earn a 4- or 5-star rating, given the lower confidence in the precision of our fair value estimate.