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Stock Strategist

Four Wide-Moat Stocks for a Faltering Recovery

As the economic recovery stalls, investors should look for firms with stable cash flows and competitive advantages.

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One of the enduring features of the recovery has been the outperformance of no-moat stocks compared to wide- and narrow-moat firms otherwise known as the junk rally. During the last three months, this trend is slowly turning around. Wide-moat firms are beginning to outpace our broader coverage universe.

This shouldn't be terribly surprising given the backdrop of the last quarter. No-moat companies haven't built sustainable competitive advantages, so they are subject to the whims of the broader market. Therefore when the outlook for the economy looked bright, so did the outlook for these firms pushing their stock prices higher.

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