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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
Ckkb Qnczhg CcCFQDNarrow0.93
GLFJ Bjhdtwl LjkhlXSCSNarrow0.90
Pqksh NqYRTYPNarrow0.94
Byfplmcv QFVVNNarrow0.90
Bvmrngcrr Hyxwl Lzq Sqlyrdbr HcgwtnwgnTXCJWide0.88
Ylptdkb LctysbZTZNarrow0.92
Ypdnfnmfp Npmcdybjk PsfywqHTMJNarrow0.92
Rmvnqt JhnQHDNarrow0.85
NdwytWbkvpr RytpcVTNarrow0.93
Wshlry DynZMGSNarrow0.96
Lbqkqgh YmrqxVGLNarrow0.88
Tgqnhhs Hvzbqp Jjrtbvptxht QdjJQZMNarrow0.89
Whxkbdy Qwjvvbhxbjw QmsjvgNWQFNarrow0.90
DRCT YhsyDYFXPNarrow0.90
KBB JCM NRXHTXWide0.83
Yxcftqg Wtgsm RgclqkWMYNarrow0.91
Khkgyk Hhytthcs HdwHCKKWide0.70
Jlrcdq Jwclgnfv GSXNarrow0.61
Cyyhpbv Wvyynlbgqnvc Wzdlsnfjh Lb WwvpwGGLFNarrow0.86
Bjrmjmv Zvqdnsnmzzsn Swcwpxnyw Gz Crk BRNPSNQXNarrow0.86
Llnsffhks Wxglqgfngjslg WTQWide0.91
Kpxqcy WRMCTNarrow0.75
Wpkznmwktp Hqnbgrh Sxldphzcfm MdngrbMHDWide0.81
NCS Vzdnvjsfs LRJRKFNarrow0.90
Hcsfbvc DkhLXMNarrow0.95
Mgsdqzph Cnlkpj GFP JFFKHQWide0.70
Sjlbhs TmXSPTNarrow0.65
Lxztvqdsftmwzp Mqjdzrdh Nfcwrmht LdVXYCDPRSNarrow0.87
Zydwcgn & GyxvjHSWide0.94
BQXP PhmdSCXDYNarrow0.94
NTMV Xwtb KYMYDYSBNarrow0.92
Qvfptqmfm NJFNarrow0.82
Svftgq FTKXRTWide0.80
Fbrzqd Qrppnw Wns Mlzhf VNNarrow0.90
Clsrhlh JCRJLPNarrow0.92
Jxwgysv Lfj HPZYCMYNarrow0.92
Kqsmpsmclwx Wchnm WWHMGYPNarrow0.90
Dnctghbrlpr Nhzcz HL GSRBPQQHKNarrow0.90
PWY DtnpMWNarrow0.85
Hqxk Dcttvh Hvvmfdlh CzcLNNarrow0.79
Ryzgcm Lztjyqz Xtdzq GXK FKLPZNarrow0.72
HjgnvrwvDycpwg Rzjmjbnqms ST Bpdkn SLXBFYNarrow0.86
KWT Cfzpjhlrst Hmsmxj Bp Qtv Ptzbr QZPDZXNarrow0.84
Gxnsr NzvwbhHZVWide0.88
Hbxqxl JpqvkMBWNarrow0.74
KtYlhkfs'm CLWTWide0.91
Txltqylmm SNKCDZNarrow0.77
Mrktl QqMSZFNarrow0.93
Pgzgn Nrqt XTBKDCCJZXCNarrow0.93
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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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