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3 Stock Ideas from The Ultimate Stock-Pickers

Managers were attracted to industrials, energy, and technology stocks.

The Morningstar Ultimate Stock-Pickers Team

Aug 28, 2019

Our quarterly series, Ultimate Stock-Pickers, culls investment ideas from the most-recent transactions of some of our favorite investment managers. With all but two of our Ultimate Stock-Pickers having reported their holdings for the second quarter of 2019, we now have a sense of which stocks piqued their interest.

[Deep Dive: Our Ultimate Stock-Pickers' Top 10 High-Conviction and New-Money Purchases]

The buying activity was somewhat concentrated within the industrials, energy, and technology sectors. Several of the stocks these managers added--including Booking Holdings BKNG and John Deere DE--are fairly valued by our metrics. Several, however, are undervalued by our standards.

For instance, three managers bought Cognizant Technology Solutions CTSH. This narrow-moat IT-services company is trading well below our fair value estimate, and we think it’s an attractive investment opportunity today.

Two managers picked up Microsoft MSFT. We think the wide-moat company is firing on all cylinders: Adoption of its cloud services has been strong and margins are improving. It, too, is trading below our fair value estimate.

And two other managers purchased shares of Diamondback Energy FANG. We think Diamondback is among the best-positioned oil producers in the business and can thrive at Morningstar's $55 per barrel West Texas Intermediate midcycle price estimate. Shares are undervalued today.

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