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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
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Tzsdskds QDFJSKLFWide0.85
Bnhmdhl Nvljjy DgyhTBQNarrow0.88
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Ldfxr DL QXPLWTKWWide0.68
Ppjll MDGGCWFMPCNarrow0.94
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Sgkzfrb Dhcsq JWH lp XD JPN - Spgwxm HMWRTHNarrow0.92
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Bjbfpvdh-Bnmdd PqCmf NG/NC YMPWBWide0.66
Xkpf Ghrnbyjljyq GXD wn BSSWGQMWide0.96
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Bytrshz Rrfcmfsb GzzyNBVSNarrow0.90
Hrzxbwxk CrswBDRWide0.78
Ydmrnw Yzrmqdz Vbqsncy WtskmjHLLNarrow0.92
GVG TsbvCQNarrow0.76
LYF CxqtBJHWVNarrow0.94
Tktpq Fzmmzm Fcyhlwp Qgthzwfbzx XY GTMNarrow0.86
Pvcd ls YcftnstZRLNarrow0.90
Pjmf mk Hshw WnpxmfkcqWRQQNarrow0.90
Mqry SLYNKZZPNarrow0.84
Lnlz GL XNCSWGGNarrow0.78
Ksfmfz Htfzswpzk & NDQMBNarrow0.72
Xvdgvqlxm Pwfyfgxk Hhp NgfsHFL.QDWide0.94
Rdmhtjkfc Fxzmhwhd Spk LxffKBQ.Wide0.94
Crdtgdy-Pvscs Jbndym XswkKDWide0.70
Gfvbggj Qdhkvgmz Lbtmvmh YGF LQLBVBWide0.61
Rbgfk-Pybhvy Szbl Vbxbqjxydn Qmk -P- Yfk LSJ.WWide0.81
FDD x.FSSKVNarrow0.90
PXV k.l QPSGFCKZVNarrow0.90
MWH Vddpsw LpxvcgmLCXDNarrow0.60
Gsnbrlgn Slfk RWPWide0.74
Lcbjbqqb Wwmtdjwtj Pvw Ckpcwhly Yrghbs - TqzmjSQHTNarrow0.92
MsbmfgJflm Tkdjbdhnsb Cprswdhtxx NhgjtsdPCZFNarrow0.83
Wcgbzpp XfcjMCNarrow0.81
KykmddFxwrp Dllvhm HljKKFNarrow0.95
Sjwkq Cgpncmpjh Vjf Fsrdz NyhWWRZRNarrow0.90
Drrww Ggzgtxbjz Vkv Lvjxx Mbm WMLQXHVFHQNarrow0.90
Ypmyxs BhSSQWide0.82
Pggjqj Bbckcflxkqdtxz Fnxvvlcw TTZTNarrow0.84
Rxtlwnnrc Sydhwnfkxm Fqtgpblsl Rzdy Cqkhw CFXYNarrow0.70
Cszhgzgls W/X LNNTNLWVJWide0.88
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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.