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By Pat Dorsey, CFA | 02-10-2010 04:47 PM

Two New Wide Moat Firms, Two Downgrades

Morningstar's Pat Dorsey outlines recent changes to our wide moat stock list. See who made the cut and who dropped off.

Pat Dorsey: Hi, I'm Pat Dorsey, director of equity research at Morningstar.

If you're familiar with Morningstar's research, you'll know the importance we place on competitive analysis, thinking about the structural competitive advantages or what we call economic moats that surround companies and keep them protected from the competition.

In particular, we pay special attention to our group of wide-moat businesses, businesses that in our view would be almost impossible to kill--very, very difficult for a competitor to move in on and destroy their returns on invested capital.

Our wide-moat universe of about 170 companies is less than 10 percent of our coverage universe, and so it's a group that we monitor very carefully, and we tend to not initiate coverage on new wide-moat companies very frequently or, we think carefully when we downgrade a company from wide-moat.

We've had a few changes recently that I thought would be fun to talk about, a couple of companies that are new to our wide-moat list and a couple that have left. I'll start with the ones that have left because of changes in their business.

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