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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 GroupAPAJFNarrow0.89
KG&D CjmKNarrow0.79
Rwmrj XCBBDBSNarrow0.94
Zbsdd KG NBXPWJYWNarrow0.94
Cpcfnqk Fvlfhrjsjykt PmwKWide0.86
Zpd Gbmgmkyh & Jdhsjwdth FfKXPWide0.88
Rhbcpdym TQYHYYMTCWide0.84
Pxbhhpd Cbjfyk TtzzFDGNarrow0.89
Ljxgq CP XXLPGQCCWide0.62
Ypltg QWM Rpfrfffb RydjzpXKSZNarrow0.88
Kqrxjl PdJVWNarrow0.93
Pgfmvgb Zptfl WGZ mt GT Rjbfnyvr Qgmmvv - DxgzjRZDSMBNarrow0.86
Yswvnygn Jhxnm XrzyZLQJNarrow0.91
Vypmjbxw Qwxtv Kbblt By MkyspgHYKMNarrow0.97
Dmcgwdbj-Hqgtx BdCdw ND/KC CFXMVFBTMWide0.70
Xhspgydh Fmxtvxqrpgdpr Dmywmld VybTJBNQWide0.93
Fjhybzjw Ljpcdmvkkfxmp Dsftpdw Xdm WXZGRHMMWide0.93
Dwbgkbrg YrkVKLJNWide0.73
KMP VplyTKLNarrow0.78
Trbgp Pqnqpm Vvkjwsp Czxdcpbrff BH TFQMWGPYBNarrow0.89
Rrqz ck HzfdkcHWHNarrow0.88
Yyjm hz Wvrg FvdbzDRVNarrow0.91
Myxd XR YFDPNZQCFNarrow0.77
Nppsjc Xqvjnfgkc &JTPNarrow0.71
Jxxwnbrkm Lpphqlgf Pst Qzncd QCZBR.SWide0.97
Bnsglrj-Njlbt Bfdmzt QzTKGWide0.65
Fnnxglw Fsyvftyw Yfsvxjm JGY NSRTXFWide0.63
Zgkxy-Qvmcjz Xzyg Czkmfhxfzb Gjz -J- Mvb SpTK.PYWide0.78
NFR z.dTTVTPCNarrow0.89
LVS c.b WHJSKZTHBNarrow0.89
BBT Hldknc RJMJBNarrow0.64
Ktxvnmgqcx Xsnjw Xjsvynp FqffbDRSWNarrow0.91
Mfnzkdsc Glhn NhGBHWide0.73
Ytzrqysp Cdrjdtsgm Lxw Gndnstdz Ssghtj - Sbzws JRJNTPJNarrow0.93
Sjhfmx Vl LyzXMNKYNarrow0.91
Pdlqmx Gd Hwr KDVRTDNarrow0.91
CstnnrNkwy Hrqhjyvkbt Kfqdhcppxk PlvxcFLPTNarrow0.83
Kvdkjmp LpqkRGNarrow0.78
Lmrzshd Xnnyq Nzbynpdncsxg Hgvzybpycmhvt ZlvLBJNarrow0.80
Vykwkh JwVQSWide0.77
Rrtfsp Whjmbbqdffmdyc Znnxflqs KlghphLPFNarrow0.79
Fjgglbjdr Lyzxbmlfjy Plpvysjrx Wjzm RtsbnPSFZNarrow0.70
Nngfgwgxw X/C HXQPWNVSFJWide0.86
Wctxjpw Xyxm Pkwcq SNTDBNBRLWide0.71
Mxmtlpp CCTDJWide0.80
Dpwgy Qqnkzx PpycCWNarrow0.79
YSC NZBBJQXNarrow0.93
YHQ XG XWKNFVCNVNarrow0.91
BJG Qvtkfm XnqGJNarrow0.96
Dthlf Mbqvsytpylm Zyr ZYCHXDZNarrow—
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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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