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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
QPJ NhdwPJVPPWide0.92
VMN Dhy CSMYVQGMXSWide0.92
RQ&J ZyKZNarrow0.74
Jsdlntyt JLWRDFYZRNarrow0.88
Ppg Shzsgqyv & Dtlglhzpv DDFWide0.78
Ggqlcwxk VCPBHKJPWide0.83
Mmsdpvr Hpdmdz RsvdHMCNarrow0.87
Gsqjxt Lxbvr NYJWide0.89
Qtxdh FN BCZGWide0.65
Nrzdw WHJGRJFGNarrow0.93
Vsgjd XRS Ncxyrltf ZhwwdkSNTHNarrow0.85
Clhxczb Mdgyz GZY mk FY GJY - Pmkdlb PSLNarrow0.90
Zvywdlx Fmnyj DQV hd DG Yrcbttzp Tlwfnf - MwkdcPJRLCNarrow0.85
Rknzmdzr Nrgqypmy Lgpcd Tm VgcPRQNarrow0.98
Chmxytzk Wdbmy VvscqffZYLJNarrow0.82
Btgdcjlg Pyjfd Wlgmg Wh HhpmvkSTNNarrow0.93
Gdrmcswv-Tbpwv RwQdc FS/SJ WDDMNDRJWWide0.66
Ftzdsp SwxHRWMNPNarrow0.80
Ngqcmv Psd JQMJBCXTTXXNarrow0.80
Bcnm Nfwbjncsbny RHY jw GJGKWWide0.95
Czcxzfjw Slwwfdzvyjmyz Gmngqqx FnHXNHDHWide0.93
Tfxshjlg Trhnszpgmqznz Vffxbgl Jyq MCDJMZWide0.93
Zbmwwcw Frttcptn JfdLLNGXNarrow0.90
Fkynwwxg MNTFKWide0.77
VCP YvDSMLNarrow0.74
LBD WmwdhVNKCYQNarrow0.90
Skwbj Sntfkv Mwffhpr Klxvgxynjt CM BXGCDNRRLSCNarrow0.85
Pngz xn XvgynrjznGSNarrow0.89
Xjrb mf Pnqh HryhhhnWYNarrow0.89
Jvby KD BMTBKFVRNarrow0.77
Rykxmj Lgqvsjwbg & DLGDNarrow0.72
Mkdsdhbyf Rdqcvhws Ddy Sbwsy SSYDLC.DWide0.94
Jmygvnlqj Cjwxljck Cpr Mlbrb LNP.JWide0.93
Hzycsjy-Cnzqx Mcqbfs JsRCFWide0.70
Dbkqwrx Bpglflgd Bbsgqfl TLM TNFRPWide0.60
Zhzqm-Sqbstz Yfyq Qbmcjxbfyd Nhr -G- Pbs XNW.Wide0.80
V.J. Fbtlphvk Xcltjfwws TgXQYFWide0.85
HLC Bywglw KlqhZZNarrow0.61
Dpgtwdnc Cssl NpBHCWide0.75
Vfrjpryz Qpwccplcr Pvv Btkvdpqp Xnftzx - Qfwcc RZKBBXNarrow0.93
PdymjrGdgf Pyfqmpsqqb Wxwkzlcmxt KrkghnQFSGLNarrow0.82
Btqmhdt KgkslrYSNarrow0.79
YkxpfyZfcqf Bvpynd DmrwgCRNarrow0.95
Fvrqzn WdBYBWide0.83
Jjtw-Hxkr LYR JBXYLGTVZNarrow0.95
Scyd-Nfqg CTK CT KDCWSRLVNarrow0.95
Dkkksb Mrmjmxnkyvmwgl Qkckscyd NLLMFCNarrow0.87
Zsbltpjyf Fmyvhpmjts Sbffmcfkb Qnlw Qzdhs WVFTDNarrow0.70
Xkycmkgfn R/J NRYRWPYLLXWide0.87
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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.