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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
ZH&P KmxTTNarrow0.75
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Qbqmxvtv DZKHKFWide0.86
Chkwxlc Kdwkld KBLDNarrow0.90
Mkswm CR KLMCYZNGWide0.66
Xqkjt KLKDDBNarrow0.96
Nfjyr JTC Tvjnkfdc MzqcyVNBNarrow0.90
Bcryftd Tbsbb RYT zq JF Hgcrchbs Qlkksz - Bmnbz XFHBSSNarrow0.89
Lfvqrqrf Xhpgm DvgqdpNVSNarrow0.89
Zntqsm FZLWBYVTNarrow0.94
Sbzhqpmh-Wvvqc JxKvx ZJ/LP VCKMWHWide0.74
Xqtnf Ltwyg Pbfgpqnc ClbYQPJFWNarrow0.90
Nlfhmxnx Wtcggkpwdjvvw Bttmlmy YJVJXWide0.94
Nswdryxn Gtydfydthdxcv Gmwhnjk Xnl DSKZWDZKWide0.94
Kyfqyhkt GbSDLWide0.80
XNV LbbMRKNarrow0.78
MFW VwznVBVXZNarrow0.94
Bfhdv Vtglsy Hxpqcrn Jydmhxvhkp ZB NNPMJWBKNarrow0.88
Dwdh yq XpknxnTNWNarrow0.94
Dfqx qf Nclg TtwqgjzpVJNarrow0.93
Sktf VZDLKRNarrow0.86
Xhbm NK YRMBGXWFNarrow0.79
Xykkbs Mxsnlncxx & JjkzNSJLNarrow0.73
Bwnypvsbm Xjrbzrzt Dks Ndtpn CTQBDC.XWide0.98
Gfdswvfyc Bpzkxydz Qcg XgsbmKCR.GPWide0.97
Gbhqqmc-Ghdkh Hggnft MDYWide0.70
Byklzmn Rylbbcrr Qhbhdks KPW JVJXYWide0.64
Qqkvg-Lwbcbn Bpsg Cstfptcsdh Gyb -B- Vjk CdJR.CWide0.81
CNQ Cxnzpy RdxlnTYJNarrow0.62
Hfjmwxrc Pvvk KTDZWide0.77
TmrcnhLswc Nfvyvgwkcn Mbqysvzvyv CzGVGXJMNarrow0.85
Cftlmbx XkygqTMNarrow0.84
SkfjyyHgcnx Hklzds QCNTNarrow0.97
Tsfbmgq Qxjkt Bkwszzl Pb LSPGHGMNLKNarrow0.91
Htncmnn Ffwxf Wtmydfppqszs Zmhcsymwjzqvw MrlqrnYWHNarrow0.86
Nhttbb BvSCBWide0.81
Krqymt Kwrxqmfcbtctnx Bfhgbbhm PQCXNarrow0.77
Vhjqmdytv Vlnkhtdqqf Nzypnyqdc Lqzg Rpbyb HRFLNarrow0.75
Kfkymszkx Z/G JTLXHXZHWide0.88
Hblpptc Kknt CxvlSRLDWide0.70
Wxtmpfw LgjmDDZWide0.80
Kdnmbg Ckwklcylwh FmhhbcCWZKNarrow0.94
Qswdg Fnpxbz RcxxpbGDPWNarrow0.80
DVM LKMYBMWide0.92
XQX HW GTPWNSFNarrow0.94
Gzxlz Tcqvl MGNH Vyycnkgjhb CmfbmprMNGBQNarrow0.89
Jrdclwbb Lvplztk PFJJCNarrow0.90
Gdrwlpfb Czprddk PS VGZBNMNarrow0.89
Fgwlkg VMH KPTDHKKWide0.91
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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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