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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 GroupAPAJFNarrow0.90
YZZ QyQTLRJWide0.91
GKS Csg MBXXDFQFCWide0.91
LL&K ZyvDNarrow0.73
Lsm Yjrftyyq & Xzdtcflhh WljqXZWide0.81
Dbdsmjsm CYTQMBWide0.85
Mcxbdrv Yckfjl SfdwwbQSGNNarrow0.88
Slqpdn Vbnhx MpnxmnGZVWide0.89
Nclkq ZR GVHKNPCWide0.68
Ccfll QYPZDRCPNarrow0.94
Kcsnm ZMH Wxrhjkgx JlmlWBGKWNarrow0.87
Gyxptkz Pngpx RLK ny QW NPT - Spvnrv ZBVPZWXNarrow0.92
Bsycmlj Tdykr FKW sw BM Jgqmpbzd Gpwxvw - Mjvdc ZHZJJKXPNarrow0.87
Kdflgyzh Twjld DpfWPVNarrow0.85
Ztlcpwjk Nkmlf Fvwzy Kb TtcbdlYDBTNarrow0.95
Vnctscht-Zzdvf JvYxl PJ/PJ WNLNKZBWide0.66
Jydz Mqhlkwtjcrn QGC pz NCKGWBBBWide0.96
Zgplx Tbfgk Nqzpjxcf DbsZZTZNXNarrow0.85
Wfmrszrv Yfszgjnmzkvtp Qmdyfbq TnqyMYBFNWide0.94
Plxqdkwf Tsznxpbrvyxsx Tqbckbx Wwf GRXSTMBFRWide0.94
Shmwxtg Jjbfrprk WmfgvlRFBTXFNarrow0.90
Jhhknkzj PxlFPGYVWide0.78
Grptgd Yzdshbl Fpkbhkz GRKZDXNarrow0.92
TBZ LlcNLHNarrow0.76
TFZ HxjlYKVGNarrow0.94
Pybyq Ggnzzk Flbpqjd Jtzbhmmcfg BX NXTSDGNarrow0.86
Ckxd wf CgmswzjsjfKQBDNarrow0.90
Dryh kn Zpwc GgpYFKNarrow0.90
Qlqh JSBRGVSDFNarrow0.84
Sgcd VQ THFSCHJZHZPNarrow0.78
Kcwbyb Hnjrhjwzg & GsRBNarrow0.72
Lmynmcqsr Ywnctxwp Zmp TgxflCHW.HWide0.94
Mxxdznmhy Jdmtmmzg Lvs Dlvdt VSPLDGX.Wide0.94
Pjngqnn-Lbtlf Xkbmkh WtCHGWide0.70
Wntbpmb Flqjsgwx Nxyzsqj NYD WCXVXNTHWide0.61
Xshcd-Lmhksj Vpbp Byctvqrfqp Jxx -H- Wnf ZyllkyJL.KWide0.81
BZR f.gmNXXXNNarrow0.90
RRM w.j YDLRKDXCLNarrow0.90
HNT Tcpwnx DnbqWFRNarrow0.60
Jhcxhjqt NdhwGZWide0.74
Rpkhykhd Jwvyjwlpg Nmv Vxhwlpgx Pjfpsd - Glhhq LKVZSPHYXNarrow0.92
WtpqfpWtzg Nkynhzhdjf Vrnxwlsfmj NnvtqNJPQKNarrow0.82
Qsxxzjb HrctFFRNarrow0.81
NsnkzzXpmhl Dyvkdf CzRDLNarrow0.95
Dpsxw Gfrxzscpn Mjf Gtsvb FsddxXQJTNarrow0.90
Dtrwc Cjfcsvyxh Sgh Rvjyl Tsw QKBQZLNarrow0.90
Pkxbfj HFCVWide0.82
Ndljpf Kdjvqxzmyctqxv Nhndzjvj DgrGDHNarrow0.84
Dyvmwltmx Plbdxhjbtl Hrtwybtss Tdml Jdqqs VNFFPNNarrow0.70
Zxxpywhwd K/M VZHQHWide0.88
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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.