4 Cheap Stocks Among Recent Economic Moat Changes
We've cut or boosted the economic moat ratings and trends for more than a dozen companies, and these four firms look undervalued.
Most stock investors will tell you their goal is to buy stocks when they're cheap. But cheap stocks come in a few flavors, and not all of them are appetizing. Take "cigar butt" stocks, for instance: They appear cheap today and could turn a profit in the short term because they often have a few "puffs" left in them. But ultimately, they are low-quality businesses with deteriorating fundamentals. A real investing coup is finding a bargain-basement price on shares of a company that is well-positioned to increase profitability for years, or even decades.
The reality, though, is that's often easier said than done. High-quality stocks don't go on sale all that often. But sometimes the market sells off indiscriminately, or investors overreact to short-term headwinds facing a company or industry, which can create attractive entry points. It's worth identifying which companies are poised for superior long-term profitability and keeping them on a watchlist so you're in a good position to scoop them up when an opportunity presents itself.
Karen Wallace does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.