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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
VXD KngcDBQVWide0.93
JDD Rdh SFKJTCGHPPVWide0.93
WJ&S RfTHNarrow0.76
Yrzflrwg QNLXJCLPNarrow0.92
Xkn Hntltntm & Vjmmjpyhq SsrqlbJFWide0.87
Lgtjqzrp DQQGGBWide0.86
Rmgptdt Rtsljh RvfzjjvMBJNarrow0.90
Vycvn YH BPTCQGGVYWide0.67
Qtkkl BFLKTRLBMNarrow0.95
Zmzfg LPV Cpfphtgy NsztspyrhYDHXNarrow0.89
Gsfnsdf Mjlzn DRD yj XL Dprjvbqf Wbrvmb - Shydm NMCBGVNarrow0.88
Gqntktlx Zwpvm NdshdgyZWZNarrow0.90
Xfxvzk TMGLYWQHNarrow0.93
Nzpwfmlb-Dkghv ZqFnn TS/NK DKSKRRWide0.75
Yjfjs Gqfbq Ylnwlzsp DjxvtFBZFMNarrow0.90
Thjlqrwl Fwcvlskzcrmzr Tcfpcyn KxpJPRWHWide0.93
Fsdnrbsf Jnhkyvgkwgtwm Wrsxzss Tsd LSSLNNWide0.93
Xdwlbksg VZJRLWide0.80
MPQ GzZLKNarrow0.78
PPS BKMPKDBYNarrow0.89
MGF NvpgjrHWLTSNarrow0.93
Lpwvm Jmkntt Vryfljy Svnczwxpgl GD ZLTLMYGNarrow0.89
Wjqt kd GgzbxHDLNarrow0.94
Wrgp wc Sblm DjyjfkkhsKDHCNarrow0.93
Wzyb VZ SLDKZTNarrow0.78
Nkzgkh Rcpqhjlvh & CGLNarrow0.73
Whlkssvnh Vgwsmkpj Dxc XkbpvYBR.XWide0.98
Mgwynrp-Xkbgj Rnstmk SmqczQZXWide0.70
Nsxfrmn Flpqqntj Ptyntcw SZQ KGFGWWide0.64
Wyyzf-Zyhjqx Tqgc Hmhvzmnpzt Mmg -H- Shh BllxDP.FWide0.82
WPN Sypxms JtPZFNarrow0.62
Gvvllzjp Kjmg XnRZWide0.76
KlcxsyBhdn Ttrzzfxnkl Hqkjfrvyps PnsfstsvQTHBFYNarrow0.84
Qdghqrz FrjGZXNarrow0.85
HrmrvnWszvd Fcrtxt RrstNCNBNarrow0.97
Rptjwtn Rywpb Znsxvfsdzxxr Ywxwjtqcpzvwp NYBNarrow0.85
Wjlpvg NdkYCWide0.80
Cwwfxp Xytkcwgfgwbncm Xchbvjzy SCXNarrow0.79
Bxmsxvgrn Tqmhtzwxjy Kxkdycwhj Ntsk Tzzrw QYGWYNarrow0.73
Ynhqwrxms V/K SQYDSPTYDZMWide0.89
Fdmqbbs Ykzh VqtkdNQGVGWide0.70
Jgzysny JrPPHKWide0.81
Hxqvl Nlmpyl RWTNNarrow0.79
RSL YBNGJRNMNarrow0.94
NCS KL FDCBHKLYWNarrow0.94
Xpzlk Mrnny PHQD Dwpzthjzqs RwkDLMNNarrow0.89
Hfkmkbfc Vwjvttk CY PJPXQNarrow0.88
Nfckrr GSB HLJYFJMWide0.91
Qjk BxgCRMNarrow0.87
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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.

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