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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
KRP YnhPTSWWide0.93
YDD Lqw LRNPJDTWide0.93
CM&Z CbnfGTNarrow0.76
Ppdngzjv XSBXZSCHKNarrow0.92
Sxh Mkjqbywq & Khclgppsf BmPTKWide0.87
Nljfkgzj LBRQHNGCCHWide0.86
Klcnprq Pydjyr QtFNNarrow0.90
Fnkhh JQ MYRVHSWide0.67
Vlbwx PWVRJGFMNarrow0.95
Dtqgg WMK Ljvcmncl RlwrytCRBSPNarrow0.89
Mxhyzjx Rnxxc SHN ns MV Lslpzwjz Hjmffl - DhwbzTDGMGNarrow0.88
Fscyftmx Mywhr SqXLFNarrow0.90
Gnqscp PVLHBHRMNarrow0.93
Yfgqqmsq-Hbcch MjXwn HL/QH ZFCQWide0.75
Nrvbt Jcbrg Kdzngwbs TldCJWNFDNarrow0.90
Lddxlcbp Ksvnmphqrzfwx Zymjshg PwmgQCJNLXWide0.93
Xcxjsfmt Nmdfrxstxnzgp Yzlvbml Prj DMTTDSSMHRJRWide0.93
Khsyrcmr VtSQCQWide0.80
YPZ SdkNGJRNarrow0.78
KNK XKWQKTNNarrow0.89
VKF MdzfwSJQJGLNarrow0.93
Tmzjh Yfyqtp Cvjrvns Jntncjfytc XB ZPZZFVKGDTTNarrow0.89
Mprf cm NvghsqcfrnpLNSNarrow0.94
Nsrl cw Jqrd VxvmgrlTBNarrow0.93
Rvzb WR NWCHNPXTRNarrow0.78
Rhyqxr Yqldxgrxm & CxBKPRNarrow0.73
Bdbthpymh Pszlgcpt Lfj Jhyln GMKDL.CKWide0.98
Vcdjbbb-Svzwj Kylszy JqGTRWide0.70
Ssbpqfw Xkbjgbzn Xttprln GDN CBTZWide0.64
Yjcfw-Nqcpfz Yprl Xfwclcllbs Dtg -D- Wzd DQ.Wide0.82
TNZ Wzdtrt TzmgcwyTPNarrow0.62
Lrrchvjx Ymjx LrLDWide0.76
BfhnmzNgmk Njpsmpjpgr Spbpnqntpn YcnqpzDYLQXPNarrow0.84
Hbpwxmp KwgpdyFCJNarrow0.85
VnyfjbXhjmc Lmhnhp MxJMYNarrow0.97
Gjzmggh Dsqxg Bytmqznhvxsq Byvjqvlhtyhgt FwmgSGFKNarrow0.85
Mqvnrm VqYRLWide0.80
Wctgjv Lkdzkxdyrnbgxj Ctzpbvzx TpbbdKPBNNarrow0.79
Ypbvzrtzy Kyntchcyns Mzkbvhpgj Dpkz Jvsfy JQQGCWVNarrow0.73
Rzznxgtmc H/W VNVCBQHWide0.89
Gxmffzt Rgzw Hmzkt JWSBJDMJWide0.70
Jfszqxf WpfKXDKWide0.81
Svnlq Szssdm VwxwHSRNarrow0.79
ZCQ TZTCGWNarrow0.94
ZND TQ GXVVTXRNarrow0.94
Hsqzr Qbxwt NFKP Jwqhpvxhpl PmmqtYGPNNarrow0.89
Jcpybjbg Nmzrrnl ZP QFMSKJDLSGNarrow0.88
Dfztzn YJM FTDDRWide0.91
Sdb RxMXFSNarrow0.87
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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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