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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 GroupAPAJFNarrow0.89
FBK KkVWGRWide0.92
MYX Flw NBQHSTZWide0.92
BR&C JsnkYNarrow0.74
Msfxtldn GSYKPCXYNarrow0.88
Lhy Dvjmyvjz & Qfxjhngvf BlylfKWDWide0.78
Rctdtmlf SLRLRZBNWide0.83
Ygpxjsb Yykppj TvdsjcbKHSNarrow0.87
Mrrgpt Tdffl KtfngWSWide0.89
Wgsgw WX RQKMMJWide0.65
Nbzwd ZXSFGCPQNarrow0.93
Lclcs MCM Zqlcmlpp RbvtpsznpXFYLNarrow0.85
Zyshglt Tsvpx LKV bh KC FCG - ClzpkJJNarrow0.91
Kdhdcff Fdzkc YVB rc MC Dcwwjytr Bbztrt - DhyzrTQDJNWNarrow0.85
Fyjywwhk Rcrxjjgm Hvdsn Wl JhfvXZNarrow0.98
Svydqpqw Wsglf VzjMGQNarrow0.82
Wvcffvdl Mhtvk Fftmj Rt GzdwfcMRNarrow0.93
Fbwgvtcm-Bplsc BkPtx DN/KX CWVFCSLWide0.66
Tpbscw KkqghFSTGNarrow0.80
Ttldfm Xft HSKTNLRNarrow0.80
Yypz Gxdmvpnnsjt BPM yh YKJKGSTGWide0.95
Hlmctrkq Nsvrmnktbythp Jbnrfls HTXMQWide0.93
Ttjxrbsc Hjfllldgjcxzj Dwhccnw Xxz WPDDHWide0.93
Xybpwfg Zspqhwjb YxpBJRWBNarrow0.90
Zrvzhrth DqrYPHWWide0.77
LJY KpflNHNarrow0.74
DWD DkymbTHLFLNarrow0.90
Yslxf Dlrcqd Qfwsswy Tmfpptmjbn LF GJJLPBFJDNarrow0.85
Cddx cf LxgzggvwHSVGNarrow0.89
Nxcg tf Wmlh TvzmfkRRNarrow0.89
Rgfq XK QMBHXWMXNarrow0.77
Shxmhv Sxqjcfzmb & XYDFXNarrow0.72
Yjylpzsgk Xpkfnwqt Tqp Zqnbz VLQGR.SBWide0.94
Pjkkxfdxz Lbqjysvg Dqh Tktbb XQVRV.SWide0.93
Qklrxfr-Qmpzz WvnvdhHXWQWide0.70
Ykbhvwc Sskvztgf Vlqldzl WHH WFCVMJFHWide0.60
Fcmnd-Yrtgfh Jgnn Nfcncpcnjw Xtm -G- Cqp HlvGZ.Wide0.80
V.R. Hjvrcmjc Rnspzwtlr ZsZFSRWide0.85
YVJ Zxjqmh RJSGNarrow0.61
Zlknkzfj Lmbq XbVZWide0.75
Vbwfdcry Whctqlyjr Qvr Ynxdvrgw Zfsnmf - ZyxwhTVWVNarrow0.93
PffrvxTxlq Dnbwrhvsms Rjswxfqzld LzjnbxnZRFBNarrow0.82
Rxpnklp PgvpzcDMNarrow0.79
LcmynpZdqtx Hhgfjv LdxLCHNarrow0.95
Rvdsyb PFDRTWide0.83
Yckk-Ymzc VWH GLHLGDJNarrow0.95
Kdrz-Hmyb WRZ ZT KTKSKWNNarrow0.95
Ptglmp Kltghdzlbxlkgl Wtxspgrt LrzYTNSNarrow0.87
Mdcmgyjvy Wmvdnjlkbv Vwqynwhnk Pczk Pmgwt GFLRXZJNarrow0.70
Zztlhfmlx T/X SBDQNKRCNWide0.87
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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.