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Morningstar

Moats On Sale

These firms have an edge on the competition and look to be trading below their fair value.
This list features stocks that meet three criteria. First, they are trading at a discount to Morningstar analysts’ estimates of their fair value (in other words, 4- or 5- star stocks). The stock star rating is calculated by comparing a stock’s current market price with that stock’s Morningstar fair value estimate. Second, companies on this list are also rated as having an economic moat. Morningstar’s ratings for economic moat (a term originally coined by Warren Buffett) capture how likely a company is to keep competitors at bay for an extended period. We think wide-moat firms’ advantages are the most sustainable (20 years or more, in our estimation), while narrow-moat firms should keep their edge for at least 10 years. Third, we wanted companies with a Fair Value Uncertainty that is Medium or lower. We are more confident in our fair value estimates for companies rated Low or Medium.
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Name
Ticker
Morningstar Rating for Stocks
Economic Moat
Price/Fair Value
APA GroupAPAJFNarrow0.90
SKS RcpJHGWHWWide0.93
JRX Cpr JFPGRTWide0.93
DB&F KprKNarrow0.71
Lbzdx PWQCDXNarrow0.94
Xfsqw JF JGJGWCTDNarrow0.95
Wrgbwd Jqpnr XTBJFPGXNarrow0.88
Hxxrrdtff dz Qmvlr RPBVZNarrow0.90
Nmqzsnqyz rq Wtqyy KS RWCLFYLNarrow0.90
Dfs Fjsshpyw & Zdlsgqnxz RkDSWide0.76
Tpvmhwfn YGXCYTWide0.87
Nxyytzp Tfcgpv WqvqhlGHNarrow0.86
Jwtpgg Hbjhp JxtCLWide0.87
Ghsnl RG TXQXFJZSWide0.64
Gxxmj BRG Ntjdpdzr BxsmyfwbWSNXTNarrow0.82
Rfyqpff Jjrsq NST zh HQ BJG - Cglmgl KPCFNarrow0.88
Fqtzhqt Pshrv JJB nr HW Bkkkkddg Lbfnxr - Dfcpr MMPKJKNarrow0.84
Ygjbmjjl Zvwhrlkh Bhgfz Vj SNNarrow0.95
Zzfmgwjg Fpsgq WrrshFVHLNarrow0.81
Njmtwtrj Vcwkq Xcwrt Ps YzykTGNarrow0.89
Zndttc BTMNJPVNarrow0.89
Bjtdrhjm-Wwdxy SpBmt VJ/BS DDCSTHWide0.66
Nbnvgn LsskRVJNVNarrow0.80
Ggrvjw Vyy LJTWXMGDNarrow0.80
Hvmp Vbwjppfmzcm YRW qm GKKFFJWide0.94
Tplnx Kwmkn Bwjcqdbc DrfrLLTBQPNarrow0.87
NrywzQlvdjt TVF VZVHLQWXWide0.91
Tntpnrmk Qrbsslyrpmsdl Sljtspn Lrk YLYWRDPWide0.92
Bbzxwsf Gkkmgvsl XpfvYYRMJNarrow0.91
Jjwzbzhb SCPRWide0.79
Dwgjpg Pjqdwdh Zvtglwh VtNLYDNarrow0.92
QZV ZzsBWNarrow0.74
GMJ RvtybCPBFNarrow0.92
Lvhw xp SshzqmLQNarrow0.93
Zknz ck Wfzr TcyvkqzzMMNNarrow0.91
Qsmz JZYMKJJNarrow0.87
Vknt TH SNLCXNKNarrow0.81
Fsdqcm Bzpqhpjkm & JgjjSZNarrow0.72
Ktvhywp-Jxvmc RvgqwxXFVTWide0.78
Plqlsch Xqkqczkn Htgtflw ZRN MPFJGFPWide0.60
Rxmys-Fmnfpt Nnfg Nvpjs NGJNRL.MWide0.90
Cktxt-Tpssgx Bvtv Scxjptpcqf Jdd -L- Sjm XKT.BWide0.83
P.D. Qdzyxxgy Xmgrlrmdb GmzgtJKZCWide0.83
GJC p.sZMXJNarrow0.88
XXL Zvdmdd JbVCJNarrow0.67
Mkbnjhcx Vrnd RFYXWide0.74
Ygpkzcsx Tpfxnffsb Qzn Cgrfdyff Ffvkvp - Rjwpv XQDXNarrow0.92
GbmgbtRjmt Pbjzcxmtcv Sdkxsnfwkt VdfxydLQDQNXNarrow0.83
Qplvqzb MhwhNVZVNarrow0.82
XdbhgvQndrq Skkmdc KWKQNarrow0.93
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List Criteria

4- or 5-Star Stocks

The stock star rating is calculated by comparing a stock’s current market price with Morningstar’s estimate of the stock’s fair value. The bigger the discount, the higher the star rating. Four- and 5-star ratings mean the stock is trading meaningfully below fair value, while a 3-star rating means it’s trading near fair value, and 1- and 2-star stocks are trading meaningfully above fair value.

Wide or Narrow Moat Stocks

Morningstar’s ratings for economic moat (a term originally coined by Warren Buffett) capture how likely a company is to keep competitors at bay for an extended period. One of the keys to finding superior long-term investments is buying companies that will be able to stay one step ahead of their competitors, and it’s this characteristic that Morningstar is trying to capture with the economic moat rating, which will be either wide, narrow, or none for stocks under coverage.

Medium or Low Fair Value Uncertainty

The Fair Value Uncertainty rating captures a Morningstar stock analyst’s degree of confidence about his or her fair value estimate for a stock. Our analysts score companies’ Fair Value Uncertainty (Low, Medium, High, or Extreme) based on sales predictability, operating leverage, financial leverage, and exposure to contingent events. As the Uncertainty rating goes up, so does the discount to fair value we require in order for a company to earn a 4- or 5-star rating, given the lower confidence in the precision of our fair value estimate.