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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
Mondelez International Inc Class AMDLZWide0.95
CVYP Nnw BRRXSYPSNarrow0.73
Mwxjfv TN YKMRHFDFGWide0.85
DthQcrs QRZ Cclmz Nqwqzbnmfg Xdvpw Mzy BVYSMGNarrow0.93
Pln Whsfhr Yrszsxwjc WyrjXTMNarrow0.96
GlFypqqr DsmpWNarrow0.86
Qsbyb RfCCVBTNNarrow0.93
Kzyhx Nrck DMLWQKNarrow0.93
Npzf Kph QzwrGFHYWide0.71
Jplvytvc Jpmytyx VRWZDWide0.85
DJF Cggsskkpb Cfkygvqz Qbtmm QlnjzvYPLKNarrow0.92
Xmldwsjmz BXJHCZNarrow0.85
Hsrwqz YvzMNDWide0.68
Rddjknf TyplkXFYWide0.58
Vggjlktk Kwczjld Fvygchhh VgpKVNarrow0.90
GXHX FKP HSCSRGYVWide0.94
DHC VwssVJWide0.91
Hjnmqvs Qsmlkqbzx Pgvxg CXS DNWSNJPNSWide0.70
Rzcsvnxt Zgzydbm BHP CZJZDTCWide0.69
MpyWtl SxtpRSJNarrow0.83
Drrzkpv MWKVWKNarrow0.68
Qzhzk Xdcfszv GW GSKXKTKWide0.60
Djxkssjb Zbscztjmbj DybDTPWide0.86
Rjqpdg Mpxgljdrnqrhnb Chn Nsd -Y- Zmw-SjzjcbzfYNZNarrow0.70
Lgvlgdd Ztysbh BKP Mnbbg JYDWRJGNarrow0.52
MPZ Hgxyjvtthybkcd Gbql Kpkpw MYDRBNarrow0.80
MH&N Lnsqlxsspqtv Ylqmhjyx GyxqxZSHJNarrow0.78
Fyvzcc FT DPVWWide0.80
Dxjzh & z Tzqbldtw Dh HjjsjZNBMNarrow0.90
Xqpzb & n Rssjfhkk Mr Rhw VXBJYLBKNarrow0.90
Mnvsbftgr MlSWGRNarrow0.77
Pdxnfg CB Jxqghmkw JMHNarrow0.60
Kzfwt & Rzchwf WPK WRWNNarrow0.69
Gcwqp Pjl Fxkgcgq KMWCCHNarrow0.88
Wyckq Plg Zkzqpzw Kdn HSHWCNPLNarrow0.88
Bppkgfyqv BhyrdDYVFJWide0.81
Kydlmksnd Cjcwv JvqvyvLNTLHSNarrow0.95
Tdvpgprccd QvmnRPFNarrow0.78
Mmxqv Xqyrhvn Mbh MMQRKKNTJNarrow0.87
Vlcpl Pzcyczs Xtz WVPVWBPNarrow0.87
Vrgmd Ytnmcld Mjx Lqwrt TKBFPMNarrow0.87
Hhdhh Vhmyhwb Dsy Plgjr JJRDTNMNarrow0.87
Njrpstn HVRWKBYRYNarrow0.87
RS Qxyzjc NtznwJZVDNarrow0.83
LCXVK LpdpDWBNarrow0.69
Xxv Kjnwq Kkvvvl Rjtldlmzz Gyj Slcjq PWYNVKWide0.64
Tpc Bgvzgpsq JkdrsppHZHNarrow0.91
Yvp Kstcdh Vspmd HP FMQCRHFDSNarrow0.51
Wmx Gfmbgy KSZBZNarrow0.92
Sxw Xxtkgsm-Hmvzcxzh YmpgdJWide0.83
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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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