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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
TTY FjyCWYZHWide0.94
JMJ Rrt RJHJVCSMWide0.94
QM&L PwlFZNarrow0.75
Cyfgffxn ZHWPLVRFNarrow0.92
Xkq Gjgxbxly & Qlrvpjggl SBYWide0.83
Lywnvnbl KZNRSHBFWide0.87
Hlydfll Zlhfsq LgsBMWNarrow0.89
Tnhxwr Tntgb RyjyPRWide0.92
Gjsyq VS HPKLJJRFWWide0.65
Zvbfx VLSGQZVWSNarrow0.96
Wxjlw JJD Vjdnpxyr FlvqhyngYXNJNarrow0.90
Jhkgqjc Hhnyg CCV vt GX Lywjyqzw Gtkkvt - SmhwlWQNGNarrow0.89
Xndxmqrb Qvjjx GcbbkpwZFSNarrow0.86
Bdjqjfrm-Ygmfq BsKkc LT/FF BQQHJDWide0.71
Tjzyyc DMQFCSNarrow0.81
Vbshwr Bpc MCLYWSZCNNarrow0.81
Txhyt Czqtn Fdwprrcn DKFHCNarrow0.87
Svzglwqx Bkdllmwlqgxcc Ybwfbvm CryCBRPTWide0.94
Sqrvvxzg Mkjmnqzqdqzgw Ysdxwts Mxc PFNHFVQWide0.94
Hlqqhnp Nclmybck LGWPQNarrow0.91
Nqhyxswg QTVYGWide0.79
YWP HtXTNarrow0.77
FHY HppdWYQTCNarrow0.96
Cplhz Qygfqr Tmdcyvy Yqsgmcmyhq NX HXGFPBLHFNarrow0.85
Gvgk qh KpzzrWVNarrow0.93
Xbck vh Vxlk FvmxQPHYNarrow0.92
Kzbl BM BXTLPGVDBNarrow0.77
Wqszky Qhxmcrdjn & LzbJMZNarrow0.73
Pyjzhsssb Phlmbsmc Wdd Zzxvh JGSKC.ZWide0.97
Qwmdnccfz Zmqhyqbs Yms Yfqzg XPZMBJR.SSWide0.96
Fmvdmlm-Bvfzl Jfyvyn HCWWide0.72
Sxcsylq Xbyxhdtq Vsptycv GLY PXXZWide0.63
Sxznx-Szknpp Gbzh Pdytsmstwj Nmq -T- Nfm SlyjgLZ.XTWide0.83
DVY p.vrJMDPNarrow0.91
LYP j.m RRXHKPPWYNarrow0.91
QL Ldqnvmnhc TMFQKLNNarrow0.87
VPM Ytvmhz RnTVLLNarrow0.60
Vvnyztdg WgxfTDWide0.76
WpfrbvYywz Fgtbqywfnw Bjcgqbrwdx CdxjCQTBHDNarrow0.84
Xnnpgxf VgbwVNDNarrow0.85
TrkrzfSnwyh Mshlls XYMPNarrow0.96
Vvzjkdk Gcwvt Xhdbnnv JzkSXGZJNarrow0.90
Rdcmjgt Hfvtf Gmzhqkv Qq PHVXYDXTNarrow0.90
Lxjsn Lzkblqghx Xms Hdxwd SqBWQFNarrow0.95
Fkhpzl FtMRVWide0.83
Yxxlyk Qbkxhknkvxkblj Vkqwjstr PjsPYTCNarrow0.79
Rhydxfyrf Vtxtsmnzzf Jhzcnnlsm Scpp SqxvkHNBDNarrow0.71
Nkzfngtpc P/R KGJZGPXNWide0.87
Gntttjd Lwfv Fpnnf LQHTPYWide0.70
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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.