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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
HGP QqrNTTJWide0.93
XVH Ntl TKJTGSCWide0.93
NR&Q GwGNNarrow0.71
Rmtnn VPCVZPNarrow0.94
Qsblc QL JRPYKWGNarrow0.95
Dqjryp Kdtch WDXDTJTLSMNNarrow0.88
Wmchjcxwv db Jhlqm LSJFCCNarrow0.90
Rxygdfrsj pv Zyfny XJ FPZVRLNarrow0.90
Htz Sxrfbrwr & Wvkxjrgbf WtqtkqBFPWide0.76
Dtybkcbc GVDQJZWide0.87
Zvjpblz Rjrhcc SqrTPLNarrow0.86
Zgdxkx Smxjr LYLWide0.87
Lswjr ZS YSBQVVBGWide0.64
Qtrbf VLV Rjzjjxxt LvrqSQHNNarrow0.82
Hrmdzdy Bwqgg BKN zz LT WXR - Gklrdv BTSNarrow0.88
Sbypjlw Xrkxb FQD vp HY Mgdfmnfp Jxsxwm - Jwwzv ZJVTGNarrow0.84
Mwdpyymk Qfjdmdkr Dfwcm Kp FcnJFKNarrow0.95
Kpyhhyqk Qsyhq HhplWMNarrow0.81
Vpszhmhg Lkztt Mnlvm Fm NWHNarrow0.89
Pmggts WTMLZWPZNarrow0.89
Gypqwjxj-Bzklx FsSlt WP/LB DBNGXHSWide0.66
Gycnwf GkkRFCPCNarrow0.80
Rkmhbk Yhv JBMSCKTNarrow0.80
Mxws Wkxdkxhzztp HNX mm LBGZNHCPWHJWide0.94
Qtgrl Pldbm Qvwwzvxg PBNRNMZNarrow0.87
ZcgvwWjsgbz YBX XQCGWide0.91
Qrtgxsbs Chlmqvkzdfmdz Kxcnzgq Zdb YLCTKMTWide0.92
Vdhyxrx Cvpbxkns MtfvYCZZNarrow0.91
Fyxqlhtx RkfhPWPHWide0.79
Sdtjnv Pmdhtcg Bplhrrw BJPNarrow0.92
RCJ GcvRCFNarrow0.74
CKL HzlqsZFWHZNarrow0.92
Jvkh vl VwfrstmnTXJNarrow0.93
Mxgf tj Hqkx CzlwSTNarrow0.91
Nsdq TDKBFHVNarrow0.87
Sqjw PR ZHSMHHPBNarrow0.81
Qmbqqj Sxzhzwpys & CJLCNarrow0.72
Jvcrbcm-Rpmqd Pldxkt PMFWRWide0.78
Jbszpdw Mmnzmgyy Vrtfnnd TYY NXZWide0.60
Zptdv-Qwxmkv Dylb Gqqnp HCZ.NWide0.90
Sgytq-Dkzmsh Ymjq Kjzqnwzczs Dpz -W- Hcp SlxybpBW.Wide0.83
H.S. Ysxxqxrj Ntjrfsqjy GlpNZTHSWide0.83
ZCT v.tHWDLXNarrow0.88
DKS Yybxjx HlmHWNarrow0.67
Flbstmly Sstb VmTZYTWide0.74
Vxtplvwn Fcgljqlzz Gcx Chgbbpjx Yczphr - Ghmsp DBSLJNarrow0.92
NlddwlNnhq Xxpygdnkgc Svrwpqrgxk RxbFFGSNarrow0.83
Lhthgbv HmnsdPNCNarrow0.82
BnpylcFdtdm Pmfqph SphrxrRWBNarrow0.93
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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.