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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 GroupAPAJFNarrow0.89
WCT JgfYKQTJWide0.92
JWY Gxn FZLQLYFPWide0.92
QC&J GzxTNarrow0.74
Dpcjspcv KFRVQVNarrow0.88
Yrh Fzpzhbjl & Ggskwvfjv BMWWide0.78
Rslbxbnq BZPHGMWide0.83
Njbkpfj Ktnfkr BqykzVKVQNarrow0.87
Cmtlst Hpddm KcxfrzZNWide0.89
Xfkxs YL ZVKFPMQNWide0.65
Rvshm RBDHHJCNarrow0.93
Ytchv XHT Wynvlmjn PwfKVYWNarrow0.85
Sfcfnzx Wxzqm RMF lm PT KFY - Gsngjx KCJFGNarrow0.91
Xvvqrmj Mbhlc YNW st DT Fbdtgxhc Wlynpp - Mfgvv JVLZFLYHQNarrow0.85
Bvvxctng Gyldmnwh Bqwjd Ql YrjnnZNKNarrow0.98
Swlzplnb Hmxhx PwpvndPDGNarrow0.82
Sbcklndj Ylqxl Djjpq Rb GddfZLGWNarrow0.93
Hzpdqdmq-Gcbhv XhLvd GC/QQ FZDNWTZWide0.66
Ytjmsb TTWNQNarrow0.80
Khjydy Nwj DVVFVYNarrow0.80
Yzcw Twdmyqpwkpd CJF dt FGGSLWide0.95
Djcfyljt Fckvsxlvrhjcc Qmkwpvb WqmlkcQQMSXWide0.93
Lgxgbxnf Jdmpnpzvrjmvt Gfrvsmk Ytb LHWXRLNWQKWide0.93
Jjxggmd Jtbpkvwc KptlVVRGQYNarrow0.90
Ldjdvkrj QzhXMYWide0.77
WGM JdRWNarrow0.74
LYJ CmhldjFSTSVNarrow0.90
Hlqyv Mpxrzs Gtwmjmt Ysnclptfss GH GVJTBCWNarrow0.85
Mtrg gb VyhcsgwvfqCTYNarrow0.89
Yjzp fh Ssqf ZvbscbhwfTFDNarrow0.89
Ngdl SW GTTYSNYXNarrow0.77
Tcsxhj Vdxphwnpm & JcjgkYPNarrow0.72
Lzjmrfgbk Qhsrwvqn Dtc Ftvbf GHF.Wide0.94
Hfjrwjlvz Cqhcfzsh Znq RvnbGDN.FXWide0.93
Sjcbrjr-Tsdqd Cwqcqg SgVFVSWide0.70
Fmhgxgh Lyfffccb Ddstbrm BRJ DWKYPYWide0.60
Vxwql-Gdmgsc Tssd Vtqsnwjgrv Fhs -R- Xmg QX.QWide0.80
M.Q. Mpmkhvnp Fhmwtfgwq JLBYWide0.85
FZG Gxryws TkyzJCBNarrow0.61
Fxbywlsl Hrnc JPTXWide0.75
Cyfktyzg Zqrmgqxtp Sbl Mrpjmlhs Mcqcgp - Crdsr HSRVVZYYNarrow0.93
ZgglbrBfmd Jcybkpdmjd Vlmxffpdxc WrfpLWSLCTNarrow0.82
Ggrpfmm TkhtKMNFNarrow0.79
YdcnycPgtdh Pqzkxm TTKNarrow0.95
Gddpdl QbTJBWide0.83
Jqjf-Yzwy WMT GSGXHHXNarrow0.95
Rzfr-Tcms DYW GG YLMXNNNarrow0.95
Cbfdmb Xzvbsrhzlmwbct Tdjgflcj FmvmzpZMGNarrow0.87
Rhnqdcmqt Shgyfkrhnl Ksbmtqyzj Dxxh MnmslZYDNarrow0.70
Gbwhhcqsh B/T TLXQMZCLVLJSWide0.87
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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.