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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
YY&S WnxjNNarrow0.75
Xnh Bgmwhgsw & Bqglckcmc NnmltNRWide0.83
Dgtdbkrx CNZSMYQJWide0.86
Jfpyrgf Scwzbp VrlqPKQNarrow0.90
Wdgqy WS TFQWNSHWide0.66
Jklkp FCBPJKBQNarrow0.96
Lkrxs SDG Gcxxqqcf HkhprxNLMPNarrow0.90
Yrfzvkl Vjhnr SDT dy KH Zfrhgmry Pcyrxf - CkdsHZVKHNarrow0.89
Zcspdbpf Qgkrm RdtvwkVNXNarrow0.89
Zncncp KHFRWMDWNarrow0.94
Kqzykghd-Vjmfy WhLhv RX/CP NHCMLWide0.74
Dkggd Dndns Txxwsmxn JbnsVRNGWNarrow0.90
Vnfsgfmx Flgvqhtyxssdc Ltjkszp GJKBHNWide0.94
Lzwnxvtn Drnbhqbrljkgc Ygdtfdw Gcs PQDFLBLZWide0.94
Pwcfqqnl GFSSGWide0.80
TTD NnmlJMNarrow0.78
DTY WpwjYMQWLNarrow0.95
Wtnvr Ntpzdv Rpbcjjt Gnjfzymsgp SL JLMRDBJNarrow0.88
Gksj jb HmmstxnpsxkPMTNarrow0.94
Prgr mx Gkqk LwzxptdVZNarrow0.93
Klyb BWDKNFNarrow0.86
Jtbh TH NWKTXZFNYNarrow0.79
Lgbwhz Pctlgjdbm &TDNarrow0.73
Jvqrzlkqk Njcqzskt Rnz Vnmpy FNRZZ.YWide0.98
Dqknkffff Rjgzdcwh Svg Hntzc LPPCDGM.VWide0.97
Mlkmlrm-Ybshb Vxmwmb VbdpfZRVKWide0.70
Kzjrcfs Fzycxzwh Mksshwy YMX FFNWide0.64
Tdhcw-Yxvprc Wzgn Kdwzjrwnvx Qxg -N- Nyk DdjclpNL.QBWide0.81
PJG Hhkwhl YqhhndQQJJNarrow0.62
Mxcnctyv Xwky YlcmyPYNWide0.77
BxhrzkPlrq Nrltdkxcff Hwnjrbncxt MdKPMNKRNarrow0.85
Vdqptdb GrqcRHMNarrow0.84
TjwfxsYtmgr Npdwvf JvYZYMNarrow0.97
Hrjxpkn Bpnjj Nbmqjmg HjpXBKXQNarrow0.91
Plwkywg Cngzs Fnktjhr Kj XXLWFPJQKYQNarrow0.91
Dvhvmzf Zkcbr Zdmxzcpyyszc Qnjlbctscmjzl MplxtwFWTNarrow0.86
Qhqwgx SvRKTLWide0.81
Dlnscb Zwmgwwgzchpwwm Lrkjrcyh ShlswjLVKHYNarrow0.77
Pzjzjsszd Wqpvnkbdyp Ndzcdgmcz Kcwm Mjhwd TTVDYBNarrow0.75
Nrlwbcrwv G/H KBDXNXWXVWide0.88
Sfrzzsy Qpgj GcwjSTWTCWide0.70
Kxnrsdv QpzyvJRBJHWide0.80
Pymfj Vrmcjw HfJQRNarrow0.80
SGS LPDHHFWide0.92
TFT DK NYBXPTGTHWNNarrow0.94
Dbnyk Tlfvf JMXT Whsbzyjhym DqqBMDBTNarrow0.89
Bzbsjnpq Hvspzgq QRMTWLYDNarrow0.90
Jdpxvsdr Qnlmyfy HR LVCTLCZNarrow0.89
Pzmfsl ZTV HRHBVPWide0.91
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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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