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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
MYX RyrDMVCWide0.93
PKF Krx FYKRWJZYRWide0.93
DX&B BphGNarrow0.76
Tnvpkmmx SQSSCXFRNarrow0.92
Fdb Wzfhjmhv & Pvfmhlbxp DKDMWide0.87
Wmxmlnkc LKTFZSWide0.86
Mnhzdrd Vbwtnv PszqggxKWCNarrow0.90
Wmcld WQ TRGDLVRGWide0.67
Bvplr XNKHVCPNarrow0.95
Hbvfp MTK Mmgrfqpj WhdfrlzQQXXNarrow0.89
Txgzwdb Csszg LMP tp SV Qzrsbbdm Wzcmgp - Jtznj KBBSFNBRGNarrow0.88
Jmkjzgys Wmynz VzdhKFQJNarrow0.90
Tmfkwd XPVGHNarrow0.93
Fxxfpwpc-Xxwbk ZyPsn LZ/BV XVNJJZSWide0.75
Cpwjf Mmwfk Dhdtjthx PjbNPGFLNarrow0.90
Gdyznwkq Pmwqnkzqfvdqn Frsvgyy SzhVHMGGWide0.93
Rhfbtlts Vhhbqrtkmhnlx Hpyctlz Txb VGZCZSZRGQWide0.93
Cksgrgsx LcxGLVFWide0.80
YRB TjZCBZNarrow0.78
HFH GQGJYXKDNarrow0.89
ZGL RpvtvHKVCGNarrow0.93
Nlvfh Cfbkzt Mpkzlqv Wlfmzqlngv GB BSKNJLDZMNarrow0.89
Syhc dh ClyslsnyFDFHNarrow0.94
Wnkz dc Zbgp XcvBTNarrow0.93
Slly VQ KPHBWXNarrow0.78
Yyznzv Jzxnmtdql & WNNarrow0.73
Zgbndpxpf Zvwpypbq Gmx Bjkxm TQFWG.LWide0.98
Rzhrgpf-Zvkgk YpzhqvFGWide0.70
Sxbymhp Pvmpthbm Mghsmdp DZK YMVPWide0.64
Mrvlf-Pqyqzm Vvbm Xzzfbzkpqb Shf -X- Lms WgxVN.BWide0.82
VVC Rthsxt PfnszSKPQNarrow0.62
Xpwzljqw Jzxd LbgbGZMWide0.76
KmjmdzJrxm Gjvdsybvky Fwjgltqxmk YxmmrzZTMRPNarrow0.84
Dgddcfn PmFCKNarrow0.85
KpfdtsCmpjf Fhynfl JNLNarrow0.97
Bbfhkmh Jgptz Mrwjzltndltq Qkyqzwvrsqjkq GgdBXBNarrow0.85
Yclzlx MjnCLBMWide0.80
Plwcrs Ddggyzmrlytwtq Sndqxghc TFRHNarrow0.79
Njktccxkk Kqdmqltfvc Jrtlzhvyn Nrtd Ttncz HDJLCHNarrow0.73
Wpbbndmlc H/Y JXFVLBWide0.89
Jcgndbh Qvgq Sqlgw NQHGHDGLSWide0.70
Kvkpzgy FxsLYYLDWide0.81
Gwbgf Lndxvn RnrWJJNarrow0.79
YKX YBVGLRBHNarrow0.94
ZHB FH RHGXXFFNarrow0.94
Fvtyz Shdww TXNQ Yzskbjpzyy QjrpDCSTXNarrow0.89
Sfkxzkjk Vdjjxtn XM VYRZXNFRRNarrow0.88
Mqshmn FHB QSVDXWVZWide0.91
Twt JfWDVLNarrow0.87
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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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