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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.
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Name
Ticker
Morningstar Rating for Stocks
Moat Rating
Price/Fair Value Ratio
Advance Auto Parts Inc AAP
Narrow 0.67
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Wide 0.79
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Narrow 0.95
Jzskhp Hnqyn Kxp TY
Wide 0.88
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Wide 0.88
QkxjnDqhqq Qpt KGY
Narrow 0.83
YP&J Wwr C
Narrow 0.74
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Wide 0.81
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Wide 0.85
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Wide 0.83
Bcbxms Wkktccxybpsfm Wjg BKS
Narrow 0.60
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Narrow 0.83
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Wide 0.84
Ytqsnhcxlv Xdzmtytcj Dkvqzwshm Wtl CF
Narrow 0.73
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Narrow 0.55
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Narrow 0.64
Rsywbnt Mvrp JDL
Narrow 0.94
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Wide 0.88
Zhcfmq Ty SLR
Wide 0.86
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Wide 0.78
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Narrow 0.63
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Wide 0.58
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Narrow 0.76
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Wide 0.85
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Narrow 0.80
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Wide 0.84
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Narrow 0.80
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Narrow 0.82
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Narrow 0.75
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Wide 0.79
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Wide 0.87
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Narrow 0.79
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Narrow 0.78
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Narrow 0.72
Gyzcllb Jfqvqhgt Tkb GNB
Narrow 0.63
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Wide 0.69
Ggpkwrc Mplvkswv Pgw JMW
Wide 0.87
Xyyrlhk Qwrp TBG
Narrow 0.97
Jcgfqnm Zkjz BGC
Wide 0.62
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Narrow 0.73
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Narrow 0.53
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Narrow 0.78
Vxxrhkh Vrjfq MKK
Narrow 0.76
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Narrow 0.73
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Narrow 0.66
Qnjtlj Llkhs SYBB
Narrow 0.76
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Narrow 0.53
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Wide 0.66
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Narrow 0.54
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Narrow 0.88
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Narrow 0.84
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Narrow 0.82
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Wide 0.79
Jrwbgsdkspncr Ytbhfwf & Tmxshrwnrn Sfzl TZD
Wide 0.70
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Wide 0.77
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Narrow 0.76
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Narrow 0.80
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Narrow 0.75
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Wide 0.77
Fjqlbkb Q K
Wide 0.87
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Narrow 0.69
NyzjdhndXjpyln Xcwtrvnmss MR XMR
Narrow 0.72
D&S Wffy Gbmzx BSL
Narrow 0.80
Wmvpb Xywv CVN
Wide 0.63
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Narrow 0.66
Nfdmlcydq MY QLS
Wide 0.69
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Wide 0.75
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Narrow 0.83
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Narrow 0.86
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Narrow 0.75
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Narrow 0.75
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Narrow 0.87
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Narrow 0.88
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Wide 0.82
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Narrow 0.57
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Narrow 0.71
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Narrow 0.69
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Narrow 0.82
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Narrow 0.85
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Wide 0.56
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Wide 0.77
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Narrow 0.85
Gqhjlwpk Nqqkcwc Spfgr NY
Wide 0.77
BjzjfZcyg PLH
Wide 0.58
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Narrow 0.72
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Wide 0.64
P.Z. Gmbsxvt KDP
Wide 0.73
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Narrow 0.67
BX Ynqd JKT
Narrow 0.45
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Narrow 0.53
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Wide 0.71
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Narrow 0.69
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Narrow 0.84
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Wide 0.65
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Wide 0.73

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.

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.