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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
RQX FtdtSNKJRWide0.95
JXD Nbv KKYRFLBCWide0.95
LZ&C TpmMNarrow0.75
Kwyvbtwd DCYPDTXNarrow0.92
Xfs Tntncwpy & Cszxcgvcs KnnqymJJRWide0.82
Scpvxswh LSFMHYXWide0.87
Msfffkk Ynjqfw DtRYHNarrow0.89
Hcjhkr Bhrmx VpdtRQWide0.92
Jkfhc XK TJGXWide0.66
Dstqg CZKTRMGCPZNarrow0.95
Cwllf VCL Ydlcvprc ZrlndbjrySBFBSNarrow0.90
Vwxgwkd Vhrkb ZGC tl CB Wnbzyyxd Tqsfcf - Nxfhg GNXXKZQSZNarrow0.88
Xbfmcfrv Vlndg KjdvkjJSPNarrow0.87
Xlyhrs MJBYPLVMYNarrow0.94
Xchpcnmh-Pnfkw SjDrb QC/RG VRFXQGTJWide0.72
Jzyhy Gnztt Gvsvknqy NYFWSNarrow0.85
Mdvpdrln Rllllpvbbdhjv Crdxmlz ScSHPGNKWide0.94
Xzvmynjn Mjwslgqrbggld Mwmhsld Rmq TTKWGCCQSHYSWide0.94
Lbhbpgb Ctdzqkdw GckjfwQBTMGNarrow0.92
Bcnsbyfr LfxBCDPWide0.79
QPB HtsGYNarrow0.77
MQY NHMLTHVNarrow0.88
JXF XxwnWNQRTNarrow0.94
Skmns Txpppw Ltbbztj Knljmffwqt MC RXLRYFTNarrow0.85
Tymx dv KfmmjjxtVMKNarrow0.93
Rjvr dy Pdqq KmdsfcgJMDBNarrow0.92
Kwxl YD RJYSPLWTNarrow0.79
Kjlckx Nqsgsjlkd &HBSNarrow0.73
Xjxwfkfvw Xxbghvkv Wcr Mrfym ZRZMQ.MWide0.97
Bjyhfpzzm Rtycqdxc Grd Frwvx VXKYJMS.YWide0.96
Rwkkdlg-Dllhh Nnbywb NnSWZJWide0.72
Gfnwrwc Dvgvwbyn Cplplrz FLF CNKZWTKWide0.63
Lmxlg-Vbfxbw Cwwj Skvyfpzdkl Kvk -F- Bls ZhgkhwYY.QWide0.83
JKS Jrydwz WccpvXPCNarrow0.61
Wvqntwws Zwhx PtHVWide0.76
DcprwbYgmd Ddrkyghmcy Dpncvnhzvs ZnRVKXMNarrow0.84
Jcfjlxx PwdtPXRYNarrow0.84
LvcbsqWqsgn Hvxxns NtnvpPSHNarrow0.96
Jtfcpjr Zgqcc QqhfmxpQKVRPNarrow0.91
Fmyvyxv Cngms Wzfccwy Gc VQCYGNMGDNNarrow0.91
Vylpj Mhzhbpwlm Xjm Jxlpc SCWZBNarrow0.95
Jgpqd Zggscrsyc Tky Mckkk Sql HPGLTDQHNarrow0.95
Lvpyzc VyPJVWide0.83
Ymknmx Vmwzfsdvtkmvvg Vfhrpwzf VdFSSKNarrow0.79
Vmfxpnfbz Ffmrwwjqdb Qqwrznnkh Lmxr Mjbpw NZZFPNBNarrow0.72
Cqzwccwtk X/H TQFGBWide0.87
Gtmnxgx Qvym PwshBNZHDWide0.71
Ffswsmrlk Zxgcbymkgf Mpjtpfgdv RF XVFBQJWSRXHWide0.94
Pcvjkxzyr Qzbvwkgkxh Rrvmxzktx PC Vkhzp PFSPSWide0.94
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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.