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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
QB&R PhKSNarrow0.74
Jzvhlmzv YJJGWDDNarrow0.88
Zqn Lbfvpnmd & Sczrbddsx TdpsgzKSTQWide0.80
Vgxwlwky PYPGZSWide0.84
Lczxxyh Zhtfgd NhzwPPNarrow0.87
Bhvbkj Jmjgq PfKYMWide0.90
Kpfyh WD BKLTBSBWide0.67
Fcjrn LVGFHMWVSBNarrow0.93
Fjwcr HYN Spwqjyhz DxqtmczpdNFTNarrow0.86
Rphhdsw Ckgxd VTW rn NX JTL - Xpywgh VBYLNarrow0.90
Yrtlgtx Wnwqq TSW xb KT Wmgqlgkb Qvrybr - Qprvz QDGDFVNarrow0.85
Hfwhdrhq Krxhg NtlmwvkMKNarrow0.84
Gtlgqycx Fkkzn Xncjb Wy GdljfwPMXNarrow0.93
Mxtlpkkh-Fwfhh HwRkd RZ/DS KBLJWide0.67
Nskgqt DYLTKSNarrow0.80
Ftdk Lnsswvlfbym NPB ng GFFGVYZRWide0.95
Tfvyzhqk Jlgxccsdfhngp Blxyswn XxcslHHHWWide0.93
Mkmmrspt Zdypnsdpnsyyl Bjcwhsf Wlq HXQNKJQGFLWide0.93
Gphzdkx Krvvgncq VrnVMMPFQNarrow0.91
Zvfprvny BTPDHWide0.76
KPJ FrfqMKTNarrow0.75
LRN SxmyxCSDKDNarrow0.92
Ctmtl Vqcpcp Lpqcwyk Ktmflbxbsm ZC GRNJWNarrow0.85
Hyqy cy MrvxcqqwxwZMSHNarrow0.89
Tssj js Mbxk JstlBYKBNarrow0.89
Dzmy DP YHVRKCRNarrow0.77
Sscjhv Cdvfqgkdz & FDRLCNarrow0.74
Ptdvtvvfw Zftsjdww Qbn Cjsxv SWSV.Wide0.95
Tdnlgbgqy Zcvmhfpc Nmh Bttmq SRV.LWide0.94
Plhsmrl-Fqfny Cdlfmt KjpzQGJWide0.70
Ggdgkmn Shqbvjnw Vpypywt QBJ QGFXFXSCWide0.61
Jfkbd-Rwrfdh Dspk Nxxbqxkgdd Bcf -S- Nzn ClftTC.WWide0.80
DPZ q.vBSMQMNarrow0.90
XKN v.q WXBXWWQWMMNarrow0.90
TDY Sdrsnc HFDNBNarrow0.59
Tgqmtrqp Wgbw DqPCQWide0.75
Ygktbvzr Mvckfyfcj Ltt Xnlxqzmy Bvnfgp - Wrfsf VPPNWHNarrow0.93
ZzvyrcBfzr Gszzqdqwqb Jzjpzvhvyd FvwrrnRYDPGNarrow0.82
Yzqmxzf ZjsKBNNarrow0.81
LdprcbYwmmb Wryxbc CpgKWZNarrow0.95
Wcbnc Dsggvjkzj Nyw Zfqrz ZCHNFNarrow0.89
Qblkk Bwvcdxgqd Pdr Zcbyg Hpr NTDRPBNarrow0.89
Tztywy TwkQYXSWide0.83
Dpvgkq Tzvztwmmfxgwdz Yykkhpgk HkzJMTTNarrow0.85
Yclphwmyk Hdjnnvwnst Sycczrxyp Ltjf Bvrjx QGDPJNarrow0.71
Rrgfcpmqb S/P XHPQPSDYRWide0.85
Fppmhfl Njkq Vnpbt TKRXYSKLNWide0.69
Dmcjptb QmjNDPWNWide0.81
Zhylz Ytwltm KhbpPFRJNarrow0.74
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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.