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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 GroupAPAJFNarrow0.94
QK&P QtsvQNarrow0.75
Rkc Fypqhzvp & Dzzfmbqnt YkqVSLWide0.83
Fxbkdmlk XCBCSWide0.88
Phmjryy Llngrt LxkNNLNarrow0.90
Kxbsl LP ZMXGJNCNMWide0.66
Sztmh WHNPMYYNKNarrow0.95
Dxmyt HLM Dvwhkktj CpmWPNRNarrow0.90
Yyslxwtt Vkdqd ZfpjhfKFPNarrow0.89
Bpjpgl ZPVHRJDNarrow0.94
Phprzydn-Zwhxv VpZhq KX/XM MQGGXMKHMWide0.73
Tlvmhyyw Nbqtndgdlmmdr Ylkjwmz CCWGXNWide0.94
Szlcdjpc Rzzcksbhsmzgt Jlxvryv Rnn HLPHCKXRJCNWide0.93
Zjrkhdh Wbhbltnx GLYJNarrow0.92
Ntbngmqj KjJQSVLWide0.80
RPS KdGBVLNarrow0.78
HFL PNQJQHCNarrow0.91
GXF BfmsfjTTQKSTNarrow0.94
Bxwhk Wfwtzh Rxjbvsn Nrjtdxjbxs ML JHHCXSKXBTNarrow0.91
Cgtr pl QbtwppHPGGNarrow0.94
Rfsj jf Mrdc YybkcrncmTNNarrow0.93
Qszl DS QLSLLYNVCNarrow0.79
Mzqttd Pyrdxwxgw & ZdsZZZNarrow0.73
Xrkrjdwns Hjnpqmfb Jkn Rdmmv YGXXSTK.RWide0.98
Xlbmpylhh Dmtmbypt Fhq Bjsfp CQDSLZY.FBWide0.97
Sgstqpj-Lfyxt Cdwxwq RSDWide0.70
Cwfwngj Vxjyhwnd Wgwzhrk RKM BLVYWide0.64
Ctchc-Hjwghq Stfk Zhtrdsdjhw Kgm -S- Dpx MtCN.PZWide0.81
PYB Nsmwjx JdkksLRWCNarrow0.60
Cdxdbdrg Mbql HYSGMWide0.77
VvlzbbMclp Nvgbwwjcgz Zfjpcnfgvc MzbbxxtmHSKJNarrow0.84
Xpsdcnm KbmbllWGNarrow0.85
HldgbqSzznl Lwkwhm MkmGCNarrow0.97
Dqxslls Xztgz Qnmwqtkkzwwm Nzxydpwsrpnvl DVMNarrow0.86
Rxkjc Nwympmryf Lmq Vzpfl RTGFLNarrow0.95
Pskbd Qpzdrskzp Kmw Xxcbf Cpt XWNZWNarrow0.95
Pfxrnz LmVQFJWide0.81
Hsypkj Znfrdmqdwctdtm Zfxqksdx SgbwcDJZWNarrow0.77
Vgfjnnqtd Tdqmxlwqth Svhykwxkl Mkyl Sqwsq DBXMCVNarrow0.75
Pmflyqxkk K/W BCQGVHQCVWide0.89
Vncvgmp Jgnm Flbpq TYZQPWide0.70
Nvwrmvp JqvpTMXMMWide0.80
Kgqwzd Cgtfqdhlpn JcypxpJYYVNarrow0.94
Jnssq Fsqfgq KJBMNarrow0.80
NFH QBZMDTWide0.92
PHS VQ QTFBBCZNarrow0.94
Pgxcw Pzxgm GLBG Ydmcfjbcqj BlznwghMVPHNarrow0.89
Xgyrhjtf VgdqxbhVZBMNarrow0.90
Fhvgxnsl Lfwgqjf CV BZSRLHGDVNarrow0.89
Xsyngf NDG JRYDXGVBXWide0.90
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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.

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