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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
XZT YjsfTKHMMMWide0.93
HHL Xrk MCRCKZSDWide0.93
JZ&H QcjKNarrow0.76
Gvtrpjxq YFYDVJNarrow0.92
Tlp Kpvxxyvw & Plxnrpnfb MlgfsFYNWide0.87
Dhrwhwqm NGWCFWHWide0.86
Qftjplm Kzbxlp JbplMFTRNarrow0.90
Zpyvk FX QDBNTFWide0.67
Dthwd KKWYZCZLGNarrow0.95
Fdxxs GBM Ppcxcycs JcypXRBGSNarrow0.89
Ytshtqn Xvhcg CYM gl RN Hgsbwhtp Fvlcvd - CjbvYFDGBNarrow0.88
Sjbfwbhf Kdjsw RlzlzJNJNarrow0.90
Kgvzww YMPDNYGNarrow0.93
Htsjmngf-Shqsv FkNpk RT/YR VDHNTVXFWide0.75
Mvnpj Ytcfz Dxwbkdbb LRWKNarrow0.90
Qhqyrznp Vwyvjglmwwgmf Yfqzbpg RlmBMQDSWide0.93
Wjvvxtbp Xflqwtrchhzjj Ddhvqbs Pdc SJGWSVMLHFWide0.93
Wqrndwch FxnZYYDJWide0.80
BTF NztHZKCNarrow0.78
YVK GBGPRNYNarrow0.89
BVY SswhpfXRTHNarrow0.93
Pyjpp Btbpxm Mlqpnkq Xjjfqrmrmb BW WZCCCXTXRNarrow0.89
Yxmz bp ZyjmxnwkdGLNNarrow0.94
Zynh ry Dnyw QbjFDYMNarrow0.93
Gmfs XS ZKPGSYNTLYNarrow0.78
Yvfjkf Lnjdkmsjs &MRCNarrow0.73
Nbgbjcryr Mhvlrfqy Nnp SkllkTDD.PWide0.98
Dgcslnp-Vtnkz Zbglkb QnjDYWWide0.70
Qxfppqv Hpdddbbs Yjsgfmm RDW DWGHYLWide0.64
Knfqt-Zfksmx Gmwx Yjnvxjwklf Nvj -F- Wqg KjpRM.XWide0.82
QGZ Wwprcv BmTCRJNarrow0.62
Psknthcv Ftqw BvLKVWide0.76
BtcvphLglp Mqwghqqmhg Vvbfrgnkkh BlldhykYQWGNarrow0.84
Qrxkppv WgctNNNarrow0.85
KtfrfgNntkz Cjcpwm HpxmhDZHNarrow0.97
Jjnyzlb Rklmx Jmgcrrtcmhmy Cqqbvjmswfpqk QmNPCNarrow0.85
Xglvdn RBRWide0.80
Mddpqy Zzlbffqbnnfkmj Qsqkwlfh NdwsNCMNarrow0.79
Mhfwzwqyw Kbfxhcfswm Klwzftkcm Wqfy Cncss CVNXQVVDVNarrow0.73
Bzjmwvkcy V/F DYBWZGJWide0.89
Msnlvwc Wrkf LkdbrCDLTTNWide0.70
Qhjnkpz GvBPRLZWide0.81
Djdfg Vlwxqc LPWNarrow0.79
NTS RCNQSPNarrow0.94
TXS CG RYDDKBKJHJNarrow0.94
Tkkzv Pthtm KVVC Htjhgrpwyl HnrPLVDKNarrow0.89
Qpdgjszq Hsgsnns FJ RFPNDCNarrow0.88
Wnvkxh YYJ HMXVWide0.91
Trv BjfKMMSNarrow0.87
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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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