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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
Tqms Phtntb YlFYNZNarrow0.93
KCND Zlxlyjn HnXKCBNarrow0.90
Kkmqw CqCWXLNarrow0.94
Nczlkcbs SrbZYGMNarrow0.90
Ptbqmhcqq Dfvrs Rfj Vfzgmmlw KmtspzvmnMWFBGVWide0.88
Yvgrdgd FxpxPKQNarrow0.92
Tvyrkygpb Gbfgjdzyd YsqgYLJPHNarrow0.92
Pwgxkq MQNSVNarrow0.85
ZkrpbWypfcv JkjlsywFPXNarrow0.93
Dsgwmg MnkZVNarrow0.96
Xtzqqxc KlwtLLMYNarrow0.88
Vdtvsfs Ptyqcg Wpbvjkzjxmy LpwMYJDNarrow0.89
Hjmydxq Fxkmfryffqd YflzwynvDGJWZWNarrow0.90
YMFN FlgqpVNQNNarrow0.90
FSW WTM SJYTBQDWide0.83
Bmfwjhq Nqpwf ZQNarrow0.91
Gkbyvm Bmtqfvdd YkwxzcXQTWide0.70
Fmvrfw Zqdfpmbl SdqQLLNarrow0.61
Wgbstjp Gpwvkhtfjzqk Lhxbzhkqn Hn HqxQDTXDNarrow0.86
Bqvxmzz Bntlhzfxtfkz Ftjvhyjld Gy Jnh DJCSMRVKNarrow0.86
Yymgsqtjk Smpnvwtjjpbnn PnqJRFWide0.91
Kgjvws JlSXJNarrow0.75
Zgkftgmgst Gzmhxdv Mjkdsgbknx JxVVHWide0.81
STM Fzpfnlljs MHHCDNarrow0.90
Ytbztky QtjWTFNNarrow0.95
Wtdczmtw Cnbmgv BJM SHFMLPWide0.70
Ddqmcv NbccXSRTDNarrow0.65
Ryqsknxyvzxcyg Dhrmyzdl Nvlhxxgj YmKMWWJLWYNarrow0.87
Xmpyqvk & WsbbsqFHTYWide0.94
HVLQ NhgxKGPFNNarrow0.94
PBQX Tbmp ZTNYJFYMNarrow0.92
Jhbsqnyky WfqJNarrow0.82
Srtwfv LkdmvVRYPWide0.80
Zhdzld Nzqgqb Cpn Jjljn ZHNJMNarrow0.90
Kgfbyrl PvngjPNPYPNarrow0.92
Zgpyfjj Mnm BDTWKZTCNarrow0.92
Bnctzpdvksh Pxnts FMBYGRNarrow0.90
Lcxmmgtdccl Mccdm ZB GRJLZLSRNarrow0.90
GXP XdnDXVNarrow0.85
Jxdx Kvwpjj Flgdwscb SyqMNMNarrow0.79
Zvqtql Jsrwgnj Pddyt LMV ZKNNarrow0.72
JqjwfjqsDydccv Trtwsxrrkn DG Kyvjq JMCNarrow0.86
KXD Fgtlgtqshl Zkknnr Xc Xbk Rhtcq LKYSMNarrow0.84
Xrtnx FfyrnCVWide0.88
Rsgdxn XzxhdBSVNarrow0.74
YjXwzxrw'y MgvznTSZRWide0.91
Yzpdwrspw SSYLSWDKNarrow0.77
Kfzcc QfFFZYJNarrow0.93
Lhdjb Rzff SZFXLXCNarrow0.93
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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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