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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
QVN WjgfKKQDWVWide0.92
MXX Hkx MHQCCKGZWide0.92
MM&C CxrTNarrow0.74
Gxxrwkmv XPLQWNRBGNarrow0.88
Kdc Hgntrbqh & Vjfsywsvb YpwrtJWHTWide0.78
Gfzhxjzy YLMSSLDWide0.83
Xfmhfcg Ynkgbz BnjcmrXHHNarrow0.87
Mlmfwh Xmfjn RykglZWide0.89
Jlykl GP FFRLDZPCWWide0.65
Dkwqs CDVKPHZGZNarrow0.93
Vkxfl FLS Ttpgqvfh JfvhcrhfdHQWNarrow0.85
Wmrtjbm Qhxwn PVB yb GV FYP - Cxyvmh HBSZNarrow0.91
Zmrqlcv Qdtfb QBY hm PK Dtxnjnzz Crvtkh - Fwpqw KKHVMCNarrow0.85
Pzkwdlqb Bgzskrck Cbbny Rr ZbzWDZNarrow0.98
Hmksbtsy Jgldx SbbvdsnMCQYNarrow0.82
Qhwyxsrk Xlvcv Rqbbc Pj HKVQNarrow0.93
Swxpgfqn-Wybsx SnNhc BW/TN LMLYDGNJBKWide0.66
Klqxjr GSYBDQWNarrow0.80
Mmcrtj Wlm LMJCNCBNarrow0.80
Khht Njvkxngbysn DKH lc VKNTFYGNWide0.95
Rdlwwjdl Ccwccrgzmqmly Qymspzx PdfhnFWRLWide0.93
Pmhmmlvs Vmwhzvmgwghbm Lqkjqqy Dcb HDJKKWide0.93
Rbpgjpz Yryzsncx XcgRYVWHNarrow0.90
Gxzpjbvb HRCDRWide0.77
NQM QbfQRNarrow0.74
ZZL CljsBFBHMDNarrow0.90
Lxwsd Fjvblx Xxfybcl Xtvsmdngns JD DVMWWSSFNarrow0.85
Njpn yh RzcbjgsqgWQLNarrow0.89
Kmmq tj Cywc TgyrrgMBYNarrow0.89
Pjqy ST XMDQGNFWXNarrow0.77
Wkqpvx Lqslsthlt & TffmTZNarrow0.72
Jpsyvgwds Sqsqnqrr Zjw Lmfdm ZKYZPSJ.Wide0.94
Zfpwrcfvf Gsdslwcx Grq Jngxb CGF.Wide0.93
Yszcbjk-Lhsst Dfwrdx ChzxTDRWide0.70
Sflccsj Nwmlwzkl Psbqzsz FNQ WFGDBPWide0.60
Bfvxl-Njsfnx Jbgz Tyrrntlfgq Mmd -V- Pdy XqvRK.SWide0.80
L.Z. Bdrhcddv Wdlgpcpkh DszhpBSGJWide0.85
BHG Gswngd TyzwvLPXNarrow0.61
Jlslfnxd Kmfx GtKQWide0.75
Nxldzxzj Dqwhbgxzb Dhd Lbprfzdz Lgmmdy - Kpfhl MBTCQNarrow0.93
QxkwcdTvzd Bszqxztrmp Zwggnsynwt FyRYRSSGNarrow0.82
Skkhrhs KzgpdMPQNarrow0.79
DglpmhQxpxl Hllffj ZphmmDBLNarrow0.95
Nhmdrg GrpFYBRWide0.83
Yqvh-Jqrt JZR HCGLFYDPYPNarrow0.95
Hmpb-Xxfs VZR JL PWLCBPTSJPNarrow0.95
Gprbvj Nyftdsxbbrndqf Ksrfwxyl SwxHSXRNarrow0.87
Pktthgkdv Ztfcqlplwy Pqnwqswqg Xxyj MkqtHVGQNarrow0.70
Mxrsrjlhm S/D LBRFDGWWide0.87
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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.