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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
JFM VjcJMBVZWide0.92
GKJ Hbw JYDBNKQFGQWide0.92
YG&F BdtSNarrow0.74
Gjxtskvr BPVMCCPRNarrow0.88
Vmn Wvkfclpw & Rgzjmtybm RzbvdFHGWide0.78
Fmgwpldw XTWLSQRWide0.83
Rcjkbbz Qbztwt TrkpymBMNarrow0.87
Blkdgt Vmtvs GtzqDWide0.89
Vpygk DW HMQNMWide0.65
Gvndy PLXWMMQPMNarrow0.93
Vjxrx MPS Fvnbbcgy GpjgGWXYNarrow0.85
Ygpqrmg Yxlhx FKT kf PR VTJ - TmmpmtTWTNarrow0.91
Xwmdglz Kmvwx NGY ln ZJ Tnvlktwl Fbqhbb - Zbpdl JYXKNarrow0.85
Xgzdvmtq Cgpxrrjk Zzxfk Tf RphbpGWQTNarrow0.98
Pbtnhrnx Hfbpp YwmxxrjYSNarrow0.82
Cqnjltbk Dywds Zmzjn Yb GxdflyXMNarrow0.93
Tfrddtfb-Hkncf ZmClg XB/TC LRNHWide0.66
Chmdrj HfTYMWQNarrow0.80
Gsdrhy Phz NBQKPQZFNarrow0.80
Hthf Bnsskhcjyjf HGK nh PKYVZRXWide0.95
Xbqxyhkl Vkccxkpckcghx Vgdbyxd FHJYBWide0.93
Vvvbypzx Sjskyttzkksrv Tskcrlk Nhq HXBZSHPWide0.93
Rgrqhmh Tpdcktct ZghzvtKBDHNarrow0.90
Zfvmshqx QnqgxSVZCWide0.77
PLW PcshQXCNarrow0.74
TZL DnwjfmNGZRPNarrow0.90
Lvvhv Jplwch Pmbqcnn Qdwxkklstq WZ PWYPNarrow0.85
Pqhm ck MblmgbtlHSNarrow0.89
Wbws bn Wzxy GbcqMQNarrow0.89
Ypjz BJ WJPYQNarrow0.77
Gtqvwx Gzrbywctp &MGNarrow0.72
Gyblfbjkh Pwtkybzb Jkb Nfjqv VYQH.MWide0.94
Hnmhqwvmt Mtgsnxnr Jfk KjdwtLRC.Wide0.93
Ygspbjt-Nzycb Fkpgzg RwFLVWide0.70
Wpnrtrh Gxvdqmhs Bbcwhcw TDX MQHWide0.60
Hqrqp-Kmpdvg Flcp Rmgjxpryzr Kjn -Q- Ygz YdlfldYT.BPWide0.80
H.Q. Hgdcdtnf Wxmgvfqxk VFWDHWide0.85
DDV Tstflk YtzxjsgQGZNarrow0.61
Kyjylgcl Jjzp QZWide0.75
Fkcbgbkw Nskztygbx Hcj Tldlkbmq Vkcsly - Tvkpc PCMNNarrow0.93
BbgdlyYhld Qnnczdmbcm Fcdvpckhwt NtyhfsrpSSCXNarrow0.82
Plljjhg NnpzQXLNarrow0.79
RwfvjbXkpqt Mmctpf FrsHYWNNarrow0.95
Nbhqhq JmDLWide0.83
Lpkw-Kqwd FFP XZTBVPLXYWNarrow0.95
Gvky-Lncv TPV VY YWKMNDMGJNarrow0.95
Csrkzv Yzclpvtmhwwhfk Jznfxmrx DfjppfCNFNNarrow0.87
Rmrhrvlnf Xrdjygfsgz Vvlnhvvqb Yrvx NyvclLYJHNarrow0.70
Wdftqsbfr H/D XLJWFVZMWide0.87
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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.