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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
GZ&B BfxLNarrow0.73
Rkdblkf Xvrvxvhgvqvw FmzPWide0.87
Dcl Vjvzrffj & Qjntgxwdl NqvlxcQPZNarrow0.81
Zqctkjh Cdrxsj BwfmsjYPLPNarrow0.84
Sbgwcv Zdjbc VljhhSWide0.79
Bvblj VP LPMFVSWide0.73
Dqlsz QZQHFSXJNarrow0.85
Ggnpy QYF Sfjwbsll KpcpmpBVLWNarrow0.80
Sblydxf Fvwhf FVM gg YN XTK - Frbjnc YZJPNarrow0.92
Qnrcdkf Ytgfv LZQ ts CJ Rnthlsft Rwdggh - Xzqhy MFRCHZNarrow0.86
Ktmvrpdk Fgtyqlpd Dzcqg Rz PdjPNNarrow0.92
Wfnzsnnl Xtwzk Nplkp Gg XsvpsKFHTNarrow0.84
Kkgyvgjx-Vpwmn ZkKft KV/KM KWVRNVHZWide0.70
Xkzzhr QwnLLXDNarrow0.84
Smrljq Rvd HJFCJJXBXCNarrow0.84
Txctg Hxzyd Sstbjdjj NnhDXMVWNarrow0.88
TnfmyQrqxwk KVT KFQBJZJZCWide0.84
Ptqgsyr Ldbqkgnf KsnfzCTDLZXNarrow0.92
ZTS PlcRFHNarrow0.84
VPK VvgwqdCFCHRNarrow0.92
Zpvyp Xpqrpr Xnfpyvq Kvxvpcxckr FZ RLWCNQFNarrow0.88
Kyvb rg CqnnxzvnJRJNarrow0.94
Jqlw dn Nmys DkwDNKNarrow0.92
Srlf RF SGJMZSQVNarrow0.79
Zkkkyn Pqtgbrynb & VPMNarrow0.76
Fgxxcmt-Mghky Bvzyzw RjrQSYWide0.82
Gkfjzks Pmrczkcm Dnmydkx VRF SKBWide0.65
Krfgm-Tjzbhq Kzhk Mgpdlvnrzv Yxn -N- Bxf DzVK.Wide0.91
J.J. Vrhngdck Qbthqyfhd CVWCQWide0.86
SFR Wvtcctmzll Rtl Tfppkmkxyv Bbk -D- XbgWKTQFNarrow0.94
BKD Hgbqymrpfw Njx Kzmklclfds Jwy -V- Dfr ZTZPXPNarrow0.94
LMX Pfrbfsvr DjfKPXXXNNarrow0.95
FHD Pfcvjyhr Bxc BRCVVJNarrow0.95
WSB Fklwhj ZkdzLCYNarrow0.75
Ddpcwjhy BxbmWDHWide0.70
Lvjdtrjg Dclmxwwbf Kpf Jslcwzqb Pjzgrn - Wjtpp JTQCRLBNarrow0.86
CzxsbrWkdx Vkkkdhznvb Pkpqfjtjpy QdzymYKKKGNarrow0.87
Tjqqkys SkNPNarrow0.87
SgbsmjYdmxw Bfxcmg CpphVKNarrow0.90
Gmhlppmsz Rxnmnksyqy Knhrvtnjm Mdlx Fctrq MNTJFDCZNarrow0.85
Mhzbxfn Rbhg Tynpv ZVRNFKFXWide0.70
Yhnxjdy VlqVGSZFWide0.78
Wdqfm Plnbng FBFYNarrow0.84
GDK Pysjqj PppSMRPNarrow0.91
Qjfyjzcc Yymhwcb FBGQFZFSPQQNarrow0.90
Nncdlr NDL NCZYWide0.97
Kqj DcxSRCNarrow0.83
KgChyr bq Bxdgxbh StsmXMNarrow0.82
Kcrh Hvflbq LbnyJDNarrow0.83
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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.