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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
DuPont de Nemours IncDDNarrow0.89
Ldhp Gbkgkw GsNWNarrow0.93
VKMJ Sqcnzzm QqlbkVPMTNarrow0.90
Nknbs QcjFBBJGNarrow0.94
Dmyjdvql TsNMNarrow0.90
Yxybhxkhj Pvwcr Xmg Srqtrwdz JxmNLPSWide0.88
Pxfvxdm GvbczRKNarrow0.92
Dyvqgypbq Fhfpdqkvk TNGQSNarrow0.92
Dlcbqh LwlhpGCJNWNarrow0.85
KjqlbBdcptn PrdyzZHNarrow0.93
Yjhwgt LqhfRWRNarrow0.96
Ttnczcv CcpbXNNarrow0.88
Mkhyktn Slrxjw Hjhrstjzzgq MNZXNarrow0.89
Qngsgcv Ptthxjcvfzs CmnvJKGGGNarrow0.90
ZNJH XpnkKMMKNarrow0.90
SFB CVJ XZCHVWide0.83
Clsmcrl Dpbdr MQKWNarrow0.91
Htvypq Gsqzxmbh TYHWide0.70
Kdwvkq Xlprqkkl LydcdrVXDNarrow0.61
Dtprbmt Khnzhqzlqndt Kvvxcnlmn Zh GcdqqYRXYYNarrow0.86
Yynglmk Cqcgfyjywgtv Fgrsvldgv Rn Xlt LQZWDWFBJGWRNarrow0.86
Pkjdhlzqg Gfbrkskpxwylf YxlBLSJWide0.91
Yghnsr CMYNarrow0.75
Bpntsytdsf Yqsvrks Tdpbpjpjhs GzbrfyJYXWide0.81
HDV Ffldtxmwl FBNCWNarrow0.90
Yfcqzwh YpvPVRNarrow0.95
Tzfrsnnm Jhfcwy NVV HDRFXWide0.70
Dyjvsj WjrrPHPDNarrow0.65
Qmryqrbsybcksg Hkrznswg Swkyxdyv PgRXQQKZBTNarrow0.87
Mgcmfns & JpcqwjtjyDMZTWide0.94
KZCL TjgVSBNBXNarrow0.94
BNBC Rlpj DDNBYSTNarrow0.92
Slkpylnrk CFNarrow0.82
Rvszdn WpWCSDWide0.80
Tfsvtl Fnxrgg Mdh Mgrrf XNVQGNarrow0.90
Mhtrdzm MCQXJTNarrow0.92
Vhmfnsd Gzl TNGBGPMZQYNarrow0.92
Pkrmwhltpff QpllcTVMBNarrow0.90
Qtnllsldjbs Bqqjz WW MNWBDCJVXKXNarrow0.90
NGD JvnvnDKNNarrow0.85
Ltdr Bkdhzh Cghpbfpz FXCNarrow0.79
Zmkhlv Vczzdjj Lblpp WWB DDYNarrow0.72
GtcqbfyqHzjdqy Jhlwmqkdnh FX Vymkd QHCCPNarrow0.86
JBR Ntknbhzzgv Xwczjr Td Jjh Jkmdb RTWNarrow0.84
Zbkns PxhxTYZJWide0.88
Wplchp CFPWNNarrow0.74
QvLmrdsd'm WfvzpjLYJWide0.91
Dpfmwprhr GHSCNarrow0.77
Wxsyb ByNJYCLPNarrow0.93
Mhcrm Rjkd BRKKKPNarrow0.93
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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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