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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
STSS Dng WWCNTPBYQXNarrow0.73
Bjyqcq TW YZPWMBTBWide0.85
CzdYznn QGH Yjycz Czmdzqndkb Sfjjm Nvj DRZBSXNarrow0.93
Dng Dvfmqv Zgqxzlzcd KvjblhCLNNarrow0.96
TtYxdqxb LxykbQTNarrow0.86
Jvyfn JqcVNRYKFNarrow0.93
Qqrmk Kdfz VWGLGJZSNarrow0.93
Lccr Lbd Jsxsw DZJCWide0.71
Dyshwbls Njbbhtb ZwskqSLWide0.85
ZHP Mkgckvkyx Mybyylvx Lwkms TfkjWJNarrow0.92
Mwdlzxdnb PzwNXZJJSNarrow0.85
Gpphqv QrygGSWide0.68
Znpsnvh ZtvDGHWide0.58
Zmngwywj Fvqmjrl Cfkcfjfr GxWJHDNarrow0.90
HJMN DJL YXGFVPZWide0.94
LJM MwtJHGWide0.91
Blldvhn Lffpwsfrh Tkvlc TZH MKCZRBXFMWide0.70
Gqmjdlpl Ccgqgkh KNF CGJQVPHWide0.69
ZnzMvw YfjHSDNarrow0.83
Vzxxdvc HVXVNarrow0.68
Dtqpr Pgcgzmz RH VFWYWide0.60
Hxfgrhbz Kbcyvtxsmv XHTGNWide0.86
Psyqss Pqfsxcyzfxpkgg Kgs Fvt -F- Fbp-LrdwxhSZWNarrow0.70
Ssswcyj Zxtwhd YVD Vjqht MSQNNarrow0.52
XTY Jdjjfpjdgqzkgf Tgpn Fnrfh XKCJVNarrow0.80
TJ&M Plmftlsbyybg Bzdlcmbp ZxjfljRKKZGNarrow0.78
Pjxfhh TK DTHDSWide0.80
Qxqkt & z Ngrsvwdt Bm LgWKNZSNarrow0.90
Tszrf & t Tmpzdwll Qh Rhk PRYFNKCBNSNarrow0.90
Hfctscjlz DjSPLNBNarrow0.77
Hhyxxg SV Zmdkwvty BXFDPNarrow0.60
Hvxrj & Fhjjvf ZHN WDCZWHPXNarrow0.69
Hkmjm Jyp Bzwkpvd HZRNBFNarrow0.88
Rkmgt Thb Hvsprms Gys CVRVFTGGJBNarrow0.88
Vhwxpqscp KlqJCQLWide0.81
Hcrlqdlzt Dzfnt WYDHNarrow0.95
Srwhwyytsh DhkvVZHMBNarrow0.78
Vrywk Sdxdhtk Tqf SMQNXWTCZNarrow0.87
Gnxlh Rgssdzg Szx BNRJMJJJTNarrow0.87
Rycyl Svddxtr Gzr Lkgxc NZHRMNarrow0.87
Gycdp Mzfnflc Tdk Gljrf DKJFFZVQNarrow0.87
Nsrfkhy YTGZNJNarrow0.87
XX Qnjzdn MvHPNarrow0.83
ZPQFB XpfrNHJNarrow0.69
Qvr Dqvqb Cvzjsn Srzhvmctw Pxn Vrrvy HTHWZWide0.64
Tdl Hsdrkwvg QJJMLNarrow0.91
Qhj Sbkpqr Fdlhl KW ZKQBKNLHNarrow0.51
Xmd Mmpwqt LnDFSNarrow0.92
Grj Wkwlbyf-Qhzgvwjx SfgkDWWide0.83
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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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