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By Jeremy Glaser | 10-05-2011 03:58 PM

Wide-Moat Picks for a Slowdown

These high-quality companies are well-equipped to weather a continued tough economy and also trade at reasonable valuations, says Morningstar's head of global credit and equity research Heather Brilliant.

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser.

I'm very pleased to be joined here by Heather Brilliant. She is the head of our global credit and equity research, and she is going to give us some wide-moat picks for the slowdown.

Heather, thanks for joining me today.

Heather Brilliant: Thanks for having me, Jeremy.

Glaser: So let's first take a look at just what's happened in the equity markets in the last couple of weeks. We last talked in August when things were really selling off pretty sharply, and we've seen that sell off again [recently]. Have you seen kind of the fundamentals of businesses really deteriorate a lot in that timeframe?

Brilliant: We really haven't seen a lot more fundamental deterioration. There have certainly been signs that things are not recovering as quickly as we would like to see, but by no means are things falling off the cliff, the way the market would seem to indicate over the last couple of months.

Glaser: Has this been true across all industries? I know there has been a lot of focus on financials in particular, as being exposed to Europe. Have you seen some sectors holding up a little bit better than others?

Brilliant: I think you saw a lot of the downside in health care come earlier, so when people started first worrying about the economy impacting health-care stocks, they got hit. So there wasn't a lot more downside to be had there. But when you look at really cyclically exposed sectors, like industrials, I think we've seen them get a lot harder hit lately.

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