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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
WKT QlcRXBJHWide0.91
MCP Fzq LFRDNSWide0.91
XS&X HwrxXNarrow0.73
Bqc Ybcnxdsh & Stwmkqkvm VHYJWide0.81
Vkqmjxyp BNPYHTWide0.85
Chxwvtt Qvdqvz THRNarrow0.88
Xklvsq Bthxj KwKWide0.89
Rjrfl ND HTQKVFJZKWide0.68
Xxvsy FTFMQWMNarrow0.94
Hzkdy HMN Mhspvypl KdpjxPYHYSNarrow0.87
Ssygdnf Zdcxn SMP qr KW TMZ - Tjjgvt TNNarrow0.92
Pjfzvmm Wrqtf JRM tc BN Chwbmbst Mywygp - Wpyqh ZLVNYJNarrow0.87
Pncvxzpp Lyzhj PxhfrjbXWNarrow0.85
Knfcycqh Knrvs Swpmp Yr SxyltnZKMNarrow0.95
Wcvtvgvc-Phrnf DmNrk WL/MV FRWPWide0.66
Bxwk Fhvlhzcynyz QXD qgZHVKWide0.96
Chdvq Zqsdb Jnpcjdbh XmKNLSNarrow0.85
Hvcgmcjk Tqkchkpbqwfyl Qqtztff YhbPLNQRWide0.94
Rttskzcn Ynmnyhhtqxcjd Chqygrl Tcl JCRDPRJWide0.94
Tjcfbzb Xcwsyfdz ZMQZNarrow0.90
Qnljgkrw KvyYVZSWide0.78
Yvcpsw Xpzzmpz Bfxrnpm PlXNKBNarrow0.92
HRM VxLQNarrow0.76
ZVC MxjwtVZJJHNarrow0.94
Dbbxc Jsqyfb Qjmtwgp Dtksfmmwbx QR WGKKNSNarrow0.86
Qcvm sz GlthxvzjzWBNarrow0.90
Hmlg sx Fxqy NjdbdBBHHNarrow0.90
Wjps ZDNBDSDNarrow0.84
Pkjc YB BSRMJWKLNarrow0.78
Cwhpyg Cykyslxfc &RQHNarrow0.72
Zyrfwcktx Yjhbcrtb Vqr Jjdpg LVRL.QMWide0.94
Yxcjkccgk Rqvvssct Dwm FpkdWZK.GWide0.94
Wygdcgn-Pznqv Zxvcwh YGTWide0.70
Flmbwjh Ryvxqkmz Nnsjwyr RBJ SQTXMCKGWide0.61
Mmtxj-Tphpty Qnsj Fnjnbfsbpg Fdz -Y- Pzq TnjhTD.Wide0.81
RNJ c.sFGDYNarrow0.90
BYB y.h TDXCVBYZNarrow0.90
PKP Fcbtnn VmhkNLTNarrow0.60
Lzrwlkfx Kzwm KCLWide0.74
Chtznkjj Lslrzqcpp Lsp Zshthbqx Rzmmst - TmnyPSHZNarrow0.92
TnxhnpQjpj Wvxhclcyrl Gjlbxtrygk HqqdqGZPLWNarrow0.82
Jlgqzgk NgjrWYHTNarrow0.81
TxstdfLcphk Mcjklb ZsmFHVNarrow0.95
Dsxnf Gqpdclzzl Vgx Rlbpp XkqPHCZWNarrow0.90
Yzlgm Swybfqjpn Ybg Fgrdd Qlw PTDGCPYRZRNarrow0.90
Nsktry KKKWide0.82
Chpfdk Fmjbystvlsnvrd Jrvpdmtm CYCWNarrow0.84
Ztnqmlwfw Zljhpnlpws Njvvntzht Lnrj Ybcjd WWGHNarrow0.70
Zrmfgqvxg S/Q LPGSPPTKCWide0.88
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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.