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Investing Specialists

Morningstar Runs the Numbers

We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended March 9.


Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.

What's a worse idea than buying a fund based on short-term performance? Buying a fund based on its yield, says director of manager research Russ Kinnel. There are many ways to boost a fund's yield. Most of them are legitimate tactics when used wisely by skilled managers, but others are way too risky for the average investor. Kinnel looks at some of those yield-boosting tactics, and he names four funds that take risks smartly (as well as six that don't).

Warren Buffett famously said that his ideal holding period is forever, and those are good words for mutual fund investors to live by, too. Buying and holding investments for a very long time helps keep trading costs to a minimum. It will also help limit the drag of taxes on your taxable account. Trading infrequently also lessens the amount of time that you'll have to spend on your portfolio. Morningstar analysts discuss three funds that are great options for investors with long time horizons.

At Morningstar, we're fans of companies that have carved out economic moats thanks to the unassailable competitive advantages they possess. We believe these moats will help companies generate excess returns on invested capital for many years to come. But that doesn't mean that no-moat stocks aren't worth investing in. For investors who'd like to expand their portfolios beyond moat stocks and investigate some new ideas, we profile five attractively priced no-moat stocks with positive moat trends. 

There is no shortage of speculation about what became of legendary pilot Amelia Earhart, whose plane disappeared somewhere over the Pacific Ocean in 1937. According to Time magazine, new analysis from University of Tennessee anthropology professor Richard Jantz concludes that bones found in 1940 on Nikumaroro Island in the western Pacific, which for decades were thought to belong to a man, were more similar to Earhart than to 99% of the individuals in a reference sample population. 

In the current market environment, a lot of sectors look overvalued. But within this dynamic we see the healthcare sector--and most notably, the pharmaceutical industry--as being undervalued, says healthcare sector director Damien Conover. He thinks increased concern about drug pricing reforms in the United States is weighing on pharmaceutical stocks, but he believes these concerns are overblown. He offers two undervalued firms that are well-positioned in innovation. 

Paying a high price for growth isn't always a great idea. If there is no margin of safety built in to the share price, everything has to go smoothly in the company's growth path in order to justify the premium valuation. That's why it's important to be valuation-conscious when growth investing. Sometimes referred to as "growth-at-a-reasonable-price" investing, this philosophy strives to combine strong earnings growth prospects and good value. To find some companies that might appeal to GARP investors, we screened all the growth stocks we cover to find 10 companies with economic moats trading at significant discounts to their fair value estimates. 

Narrow-moat  Dollar Tree's (DLTR) share price plunged 12% after the fourth-quarter earnings release on March 7. Equity analyst John Brick believes the double-digit decline was warranted as the market has not been adequately accounting for the competitive pressures and investment spending that was the theme of these results. Persistent cost inflation from wages and freight costs are set to pressure profit growth in 2018, Brick said. Even after the sell-off, he recommends waiting for a better margin of safety to invest.

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Most Requested Fund Quotes
Vanguard 500 Index
Dodge & Cox Stock
Fidelity Contrafund
Vanguard Total Stock Market Index
T. Rowe Price Blue Chip Growth

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Vanguard Total Stock Market ETF
Vanguard S&P 500 ETF
Vanguard REIT ETF
PowerShares QQQ does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.