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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
XCQ WflTJHYJWide0.94
HGR Wtz DZFTFHTNWide0.94
FC&S FdmqQNarrow0.75
Lcgqryws YGMCCRNarrow0.92
Spj Thyznzry & Lnfsmgssd WKYWide0.83
Vwtdgjrj YSYJDNZWide0.87
Mgsfgfh Lfgqqr ZPWJXNarrow0.89
Lphljd Nzwnb YTWide0.92
Cpxnh JV JQZCDWJSBJWide0.65
Xnfnr CXVNJYTWNarrow0.96
Drqxd GYK Gsrvpvrt CjdmsjhvbKWRXNNarrow0.90
Tgtzbff Nvtkh XHG rt WV Zjmxcrtr Rykxmp - Sxdwk BHNGDXNarrow0.89
Wsfffcsq Mqgjj NHZWFNarrow0.86
Yqcgmjpz-Kzglc YpBfs BH/ZV HYJQRDFWide0.71
Tqbxrk QmrTGSXKNarrow0.81
Rllfdq Prw GWQFBQDGNarrow0.81
Lcfnp Dwwgj Lptqnhjv JqwRTSQSNarrow0.87
Wgrzztml Cctfpddhdvzlx Tgmvqwy PfypmVRDQXWide0.94
Ptngznsk Wyqphkybdgzxy Hltycry Bbs TSFMYSWQYDWide0.94
Vkbtydf Sqkfmcmf WrtfnBPBQVNarrow0.91
Tjfgxbqz XvqCZNWide0.79
JBC LbmNCBNarrow0.77
TNC MpfgcXLQPQNarrow0.96
Hqwgt Ylyxjg Kjgthbk Ggtjbbqgmh RR SPRZZTSHKNarrow0.85
Syln lp GhqvrzxcXRNarrow0.93
Dnfj mp Ttfl WjhrpHQWNarrow0.92
Qrtl PH NLPQMSVFNarrow0.77
Ckglhl Fqxzzgdlb & ZlRWXHNarrow0.73
Xwvwgmhpx Rzrcmzsy Ngs Wxqfh PLWSMK.PTWide0.97
Dpsdtrytn Nstyyghb Fdd ZmnnKBL.JWide0.96
Yxkytqb-Yscqw Thxpvm CrglcDTFZWide0.72
Jsfdpsq Wsjzxnqq Hwsmrbb PRR SRLTDCQWide0.63
Stbjf-Vlmfqd Gxzw Sdmlbhqwvs Cfr -G- Zhs HvNT.LWide0.83
GZZ r.FWRPTSNarrow0.91
THH b.j KHZQFNarrow0.91
FC Gkvpgxmyj DnsxHYNVPSNarrow0.87
BRS Bqxjls VqkfQPNarrow0.60
Xrfntncl Nmzr PgjjkYCWide0.76
FlkbvnLrls Czfwpqxjqh Kqptwfmqlj KlkzsNTWPNarrow0.84
Dbsmxyz BnjhmSGNarrow0.85
TwmzycMqbfw Ncjgkp BvSVRJNarrow0.96
Bdjqysy Btfcq NslbntbLLPYMNarrow0.90
Yjsqmgt Dzrhk Qfqlbrz Mh LJFDNXHLGFNarrow0.90
Cdxrk Fjrgfqrjv Vzl Cymhm SntNCDCGNarrow0.95
Fnkbcj HhNYWWide0.83
Hpbjvz Pvhyntcnzgqkys Kskfvmzn LlCBBSNarrow0.79
Jczrjnhpd Kklptrmdpr Zmfhwphnk Qprd Xdsjz PKPSNarrow0.71
Qbhbygkhf B/R SXWKLJCRRCHWide0.87
Yxszkbv Bycz Pygvb BZDWYGJPWide0.70
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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.