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6 Downgraded Stocks

Susan Dziubinski

A few decades ago, was unthinkable that Sears (SHLD) would file for bankruptcy. After all, Sears was the first major retailer in the United States to go public and was a component of the Dow Jones Industrial Average. Its corporate home was the world's tallest building. The storied retailer published the catalog that generations of kids built their Christmas lists from. It owned popular brands like Kenmore and Craftsman--and even created Allstate Insurance and introduced the Discover credit card. In fact, if Morningstar had been assigning economic moat ratings during Sears' heyday, the retailer very likely would've earned a moat, perhaps even a wide one.

But Sears' story serves as a reminder that competition and poor capital allocation decisions can derail even the biggest brands. Companies have life cycles. And competitive advantages--or economic moats--can erode over time.

Susan Dziubinski does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.

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