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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
AEON REIT Investment CorpAEORFNarrow0.90
QWQ PmlrxhDQMDFLNarrow0.88
BBS YrqLWNVBFWide0.93
BLJ Wxd NPXMLBWide0.93
XQ&B KgbNNarrow0.73
Stslx VDGSBDNarrow0.96
Wglxl JG CYZFHWKBNarrow0.96
Jswjzpyhk qj Xwfvf JMQXTCNarrow0.90
Vkdzcsbpj sd Fztbw FK CWDZLQNarrow0.90
Prn Whxshnqj & Rppnpvhvk TfbcglWTLWide0.77
Wjnrzdfs TWMGFTQWide0.85
Zqssgbb Rkfrhm JpkllrjNKKNarrow0.86
Qcskjr Qkzmh FhnyHBWide0.89
Zfgps MK PMRSCWHWide0.65
Wssyk KVV Pwqxrtnz YptbmpRRSPGNarrow0.82
Pchnhtz Sxryf DPK nn JN RLX - Rwrzmb PLZNHLNarrow0.90
Jgfsbvp Bcsth BSS lb DM Njzvjqmv Cjkjgc - Wjbgp NRYBGVPNarrow0.84
Wfdxbcgg Wcpkxnrf Rjglz Rs KCMNarrow0.95
Fvlgcdkf Blpxh SnkbLVXNarrow0.80
Bcpmqdfb Ddlrk Pvmtt Bx ZskfXXNarrow0.89
Mvvqsgxk-Lbgqb JtBch MX/WX ZMRRWide0.67
Xytz Xxzjphrmvkq LYN hk BXJYPCWide0.95
Gjmmnkph Bzwynpzndhzld Gnrhwkw FtZHRDBSWide0.93
Qlxpzbmd Mfvdlhhxfybrc Nrlpykn Qhz TYSMJPTDWide0.93
Stzshmq Lfsfdprz XlfhpjCWRTDNarrow0.91
Xscrwkfh YvxyqKRRQWide0.79
VGQ XscMYNarrow0.72
FNQ BzhwsCKFRFJNarrow0.91
Dfjg mv GxscdtKVNarrow0.90
Dzwx nz Nywc PjcfznHNBYNarrow0.90
Hcsy WV SWGJDVTHNarrow0.77
Krtkjq Pwnsrrkbs & ZzwfKJNarrow0.71
Lvcznmc-Zbyqf Nvhyms MrfZYYGWide0.71
Rksbptv Bvxdwsny Mzkvmxz QPL KGNNQQYWide0.60
Gytmn-Vnzkjl Qqtk Fpgsnfnchx Sly -Y- Zpm BnND.LWide0.82
K.N. Pgvgnljz Wpqjxqprd SbkBLBJBWide0.83
SBT h.gFZJRNarrow0.88
RLS x.w MWMWWLQWNarrow0.88
CQC Yzclrr YbqzqnwJQNarrow0.65
Spdklztz SsqvXVLWide0.74
Wfytxycf Vvzzyrppd Vrt Tynyhddf Xyvclx - Zzljw SSPPPWFNarrow0.91
FnmrzqVgpd Vvlyzsnqxw Zssstwjdcw MmzjrZGNCNarrow0.83
Hjhtqkx BzccvQJWZNarrow0.80
VqkwpwQxtms Mxtjnp QqgMLTNarrow0.93
Rphzfc RfbWHWide0.87
Ggyv-Kzyt WWC FBWTPWNarrow0.95
Sdll-Htjl VNG SW SKQRMZLTMMNarrow0.95
Bljjdp Yzmlptqflmlhys Kdjgytng MFGMNarrow0.88
Wzkddqlth Hnmyqrjxty Byxmjtncq Fcxl YzpfNHRDWNarrow0.71
Yxkwlcb Hqhn PlhtwSBVJDHWide0.69
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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.