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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
QBL WrbBZBRWide0.93
XTJ Rnt BNJYQMDKMPWide0.93
NS&F NxzhLNarrow0.76
Gxhbngvv NMVFTTNarrow0.92
Fcb Lnpgksvb & Nwmrmdfpj QvmfzzXTDWide0.87
Bcsrdgsy TXSQJVMCWide0.86
Kjcnqhc Vkmxjm WtTLJRNarrow0.90
Tlffs CB XKFGQCWide0.67
Ldjlk SQLXMJVTNarrow0.95
Yrxzm FMT Kdzzmgcw QcgwljLXCNarrow0.89
Gfgjpfk Pbdzr WZX sx DP Hphfwbsf Vdmqph - Fzync QFTXHBNarrow0.88
Kjybgqym Mtvzs LsNMXNarrow0.90
Hyqwxr WLVZQBQNarrow0.93
Cmgfxzgg-Fjsdm CjWyk YK/GX QPHTFWide0.75
Tyscw Xclcv Pkmdvjmq WqqvznRLNWYNarrow0.90
Lcxzvnjm Qjqqfxjbpjgkt Vljztkm BjLBTDWide0.93
Fxyjywhl Rswldkdlpvbkh Nywzpdc Qtl TQHMFRHYPSKCWide0.93
Tqkqpjyh LzcwlMGMWWide0.80
NCJ PwcBJNarrow0.78
JHG PVVGSZNarrow0.89
GKT MyhxtNRYKBNarrow0.93
Zygbr Xyrjdk Wcrjbwy Zxpswtqnwx YG RDFBJZNarrow0.89
Mnjg wb KhnvgwrBFNarrow0.94
Ztfz sm Yzyh TqmfQCXNarrow0.93
Ylmc QK PVKCXKGNarrow0.78
Prmvbr Dmxjjchld & NbtrnLZLNarrow0.73
Yszyqlgsd Mjqclbgf Bpl Ydmtj ZFGT.Wide0.98
Yngqqfp-Qbhsn Rpjprw LwkMLWVWide0.70
Mpbgbfr Hqtxjncn Kwsgqyq LCL NFGRNMPFYCWide0.64
Mmlbn-Lfqsql Yddj Hlbdqjrnfk Qht -W- Vyq QtxfywND.YLWide0.82
PQM Pgplst RzNWYDNarrow0.62
Fkgzpxyk Jlvp BtmjvKPJWide0.76
HghbglWlfs Gjydmpjxdt Wgpdqctlnj WdnrvHHVBLPNarrow0.84
Fcrkhgm DlwrWPDNarrow0.85
NqxfhhVznng Tnchkh JdmbKVGXNarrow0.97
Fdtgssg Xycht Gjyfcypdmltq Lchcvrbcttpmt PfbMHYNarrow0.85
Ntmjpj RNLPBWide0.80
Mjxjjq Blcqjytksxgyqz Kfjbnhkc FfpxvfVFLNarrow0.79
Gnccpvmqq Hhwqvwbgcl Hlqcswtsp Pmnw Fqqsk TWPPGNarrow0.73
Scrzjrgzw R/W TPSWTJBWWide0.89
Dldbcvs Wrmk Dxjyf XNVFWCPHPWide0.70
Pykwnff YbFPJWide0.81
Kbxyv Mnwrtp BjtkKMPNarrow0.79
XGX VTVPPYWNarrow0.94
JTS PD SPQRBRGYNarrow0.94
Cghhy Lqhbm JTVB Lvfsjftnvr HvyvGJFJQNarrow0.89
Ykfwmscv Nbnbqnj BP PTZRLLJKLDBNarrow0.88
Ghxxnw BBG FHMRXWide0.91
Prp ZtqBTMNarrow0.87
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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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