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Market Update

Why the Outlook for Wide-Moat Stocks Remains Bright

With valuations coming down, wide-moat stocks may be in a better position for a period of rising rates and inflation.

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Stocks of companies with the greatest competitive advantages and strong fundamentals may be down in 2022, but investors shouldn’t count them out.

Companies that we peg as having Morningstar Economic Moat Ratings of wide--those with the greatest competitive advantages--generally outperform when inflation and interest rates are rising thanks to their greater ability to pass on price increases to customers and finance growth in their businesses without heavy borrowing.

Lauren Solberg does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.