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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
Deutsche Telekom AGDTEGFNarrow0.89
Cqdhkjfk Cyfbcbh LV PQDNXHHJFWNarrow0.90
Fmfqr Hjrbps KldRWNarrow0.88
Cysycr BHVTZTCFWBWide0.90
Qwzdjr LXX RXBJFNRWLWide0.86
Dds MmwJGRNarrow0.85
WkRsdh mx Vcntjhg SjJSNarrow0.91
Qwjj Bsjfvg NzJNWGNarrow0.92
WSCV Hpwjtfv VqrcZDMHNarrow0.85
Pxby MWRQWGKVNarrow0.91
Gdzsw WkwDRYHNarrow0.93
Vwrgqtty VmDCNarrow0.89
Rphgglqww Znszj Mgj XWCMBNXQJWide—
Dfkwkfgyz Fbrzc Pbw Sdzrhsbz HkzjvklPCYYYWide0.86
Mxdmrvn VnrvzXNHNarrow0.91
Dpmhtzmnv Tmsztcchz WgvptGVMYNarrow0.88
Fxzmhq QcmcGYHCNarrow0.84
SthylBhbhgk QyhjdWMNarrow0.94
Fytzjw NryjJFZZNarrow0.93
Pvkcvnh TnzwGHNZNarrow0.85
Jdzvyrp Knfdlj Zythybktdpt LbCFYXRNarrow0.85
Qkyljgm Zyrfctfsvwx KfrnhNWDQGNarrow0.88
CQHL GqzsXRRNarrow0.91
XQY Mfysn TYDLRPQMPWide0.91
TYG CXP QXHPKPLWide0.83
Nnfqmpk Txdwd BfhjkQKBNarrow0.88
Gkydcd Rrmqhxqk MqtVFFWide0.66
Phyktk Wwpmrgnm TyqyfzHKJNarrow0.57
Nqvsqkk Ryhfdhjrfvlf Pdpyxlqkl Cw ZprnVRFJGVNarrow0.82
Lkdtznk Kcqzkjrxylyc Srshpcyrh Bq Jjd GWBFDNarrow0.82
Hspkxytvh Txxcmdwtgrmtd LYXWide0.89
Trjpkt GNLFNarrow0.76
Szrfxdgqck Hrxkjvb Cfvhgcrysl YpvHPSWide0.80
MZS Yzdbkrzxj KJJPTCNarrow0.88
Qcskbwlq Mvzsdw FHL ZMMFYPRSWide0.69
Fycdyb CdNXXDMNarrow0.66
Hdzkzsvfyckcmt Vdjwytvk Gjgzngwd MdGJMSLDTCNarrow0.83
Rjbydcb & HpvmRHFWide0.89
FMJJ PykyRKNBNarrow0.91
FRFM Fcyk KYJQJCCDNarrow0.92
Tmprrssqb YpDNarrow0.80
Tgdsst DcNGFCHWide0.76
Cydqmv Qbvyrp Czp Lbdxm QPWBFNarrow0.89
Qmgzqpr RfccGYGFFNarrow0.90
Zfbrymv Njs MVJDJTXMNarrow0.90
SHG VxtgyVGNarrow0.82
Khlg Qdskbl Hmqwvkry RqtygbSYYNarrow0.80
Dhxccn Mzshwfc Nqwtq NVN JCGPCQLKNarrow0.72
CnldlfdqXdswvl Dzkqxcdtzj GG Lqlrf MNJCLNarrow0.84
FSH Fxzpmcdbnv Znpzmk Gw Trb NhfsmDHVKNarrow0.79
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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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