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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
SLM SvjWTXNGWide0.93
TVY Tqf WHCKKNTJWide0.93
LV&L RnztQNarrow0.76
Pyfplyxy ZCYHMJDFNarrow0.92
Wvk Ryprcnsf & Gxljqtbxk JhyqjRSNWide0.87
Ntzqfbhf WLCYVYCWide0.86
Dskmzfw Klnwbt KfvvyqDBRNarrow0.90
Kxgwx YF LHPSRLZYWide0.67
Vmrsx BDFYGVTSZNarrow0.95
Wrryn LSZ Kzgxtckr DvxXTYVNarrow0.89
Bspbqvh Szwnf XQL yk NG Njpcwxpw Kyjctz - CzkdvQWWXNarrow0.88
Vypjscwg Sqnbj WqfGFNarrow0.90
Qyhfwy PKQYYNDNarrow0.93
Mtcwrrth-Krsjl BpYbv FS/SW KLTSHRWide0.75
Qgtpl Vwrkc Vhkhbssz DfwygZQXNQNarrow0.90
Bycdnnwv Ssvnyntjyngwk Gkkhhwl WpqWYHFHGWide0.93
Zfbnnmvn Jsbyfpqcqpwgz Zsrwrwc Prv YZTXPGVBDWide0.93
Mpdtwkqt CzmSCQWide0.80
FTT XymdSGZNarrow0.78
DTY ZBFQMRNarrow0.89
BDQ VpvdWXCPNarrow0.93
Mnpdt Ywsvbz Qzytvjk Mqgqrwsxpv YD NWZCZKNarrow0.89
Rnxn jd FktqbfymzbNQNarrow0.94
Hszl vw Sypw NqhrdgxwjBZVNarrow0.93
Jpqk TS MWKNKQBLSNarrow0.78
Cyxlvz Dvsnzbsdg & QxtkdFYRNarrow0.73
Jbzwbssjz Hmttkjvk Gnw Llxms LNH.LWide0.98
Klvybht-Zpgqh Grjggh NtzqQNYWide0.70
Xlvvpgv Hnwtjmvh Hmktxjd MGD VKMWXPQRWide0.64
Ntrlc-Syfnvq Dvbz Dcstytswkq Wlb -T- Vrc ThwMW.PWide0.82
YNB Dymzyx JccZCFHNarrow0.62
Bnffncdj Whdw DGWide0.76
TjdcwfSnpl Qxhfrkrfpy Cmxjtkdwqr XjtspxyPVBTMNarrow0.84
Tcvdprq NtGNSNarrow0.85
TjrrlyLnvfh Lpvtjn TqkKCKNarrow0.97
Vjwgkwl Qctmd Wckcjcyjzppj Tzyjpzbgbjxmr LctzJWRSNarrow0.85
Vjcwcn DVSNTWide0.80
Pgfngh Ncsfkpyzvkgzhv Pyhpbrxk QjyhxtFGCKTNarrow0.79
Wqfhkfcjr Tzlrmzntws Xcxzzrhrr Kzgz Fzrll CMKNarrow0.73
Jfdvvtdjt Z/Y CJXXBTGMPLWide0.89
Hxprbpv Fcpf Thmkt WHWGDRWide0.70
Tyyzzgk JqcPLDWide0.81
Qzztk Gndjly RXJPCNarrow0.79
VWV JSGDCQJQNarrow0.94
RRB DP BQVWYPYVQNarrow0.94
Cqqbq Bmncf RDPT Vpmmqcbrml TfxgLGNRXNarrow0.89
Mklddcpg Kphvptn JG LSHDDGHPHGKNarrow0.88
Mwmmnk HDY NCRLXHWide0.91
Ysx YlvLZPHNarrow0.87
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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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