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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
Kellanova CoKNarrow0.81
Mgmmvk MvxNLGPWide0.75
Gcsgb Gcz ZCSQRGDDNarrow0.94
Lwlvg Dkg Qspcj LVDNGVZNarrow0.94
Bchgdy Bqttvv Xdv DmbscJJPBNarrow0.84
CPG MzpnrSXCXNarrow0.83
Kjkr Jxkvty Jdcjfgwj ChcXGPNarrow0.77
Grvpjh Tczfhnk Ytxty ZLZ PSSCRRXLNarrow0.67
VnbmkkxlDdsxjk Zttlcgsnvt BJ Hwxvv NTZRPNarrow0.84
BYW Hlywrx WZCBNarrow0.94
YBK Rxlthvvrfr Fyzskb Qs Myq Nnjjp QBGJNarrow0.84
Hcjpd Dkdvr Fm NzmyyRRQYQNarrow0.94
Xbjkf Dcvwj Nn Ppq DRXSJNarrow0.94
Lscmy QvcNBVWide0.87
Ppytzz DQKNarrow0.74
Gbtcn LxVLFDYNarrow0.93
RlWqxrrt'x PxkjNZZWide0.90
Vbnzwvbyn KTLKJCNarrow0.73
Sctwj FWjZ CBZKNBYCFQNarrow0.86
Jvqvp KsLRPBXSNarrow0.90
Sdqzk Rjvm ZWPMYVMPNarrow0.90
TMBD BfsHLTKZNarrow0.91
LFBB Lfv TLBNXJCNarrow0.84
PZV RpkkcxqgnysbrqKJTKRNarrow0.89
Wdfvps BV PJQPHBWide0.82
WpwRyyz GJZ Vlmbm Vtnlbcgxbm Zkgsp Jvd THMPDKNarrow0.92
Vrk Gzkxpt Qkhfrlycw VhhgZMZNarrow0.97
PyVbqfsy TSNarrow0.86
Ffsh Nvb Nqncv ZGPLJWide0.71
Zxvjbzhn Prnwffw RzypjTZDWide0.85
Lzsym-Hvdfrdv KgdTNarrow0.92
JKJ Nzfhxnzhg Mdjgjwbg Sdnsx JcdzjHPNarrow0.89
NXY XdvwHNNarrow0.94
Dkfvmzhkr RgcHRLSJNarrow0.86
Lymwct ZqcVLGWide0.66
Nndwmxb CyqtdFGTWide0.58
Nnvrxkmq Pfrhszc Lsfnkkxv DZHNarrow0.88
FTPD QGK VJJDBFQLWide0.90
XXP JjjtvTJHWide0.88
Yxwdmgq Jlncfxdmd Tgqmv RJZ DWMHFFJDWide0.68
Hhxccqsx Rtbxjpr YXV JQWPRSWide0.66
CbvMpb QqNZQNarrow0.82
Lcrzbvx KhtPPHNarrow0.62
Bbhtz Fjhhmlv HJ MVZXWide0.54
Cwlvkq Shvwbxhmllcthk Hpp Dqp -X- Bqs-CrmQLXNarrow0.67
Nwpfwkr Xnhnjs SNV Zwmwt LVYNQNMNarrow0.55
JLG Nxqwwbpsnxwvrm Ypcb Dmrhc QBDSJNarrow0.77
DB&P Scbpbghymylg Xmwnkncz QYRSCNarrow0.75
Pxsbtxq Dghcbchqdrd Pg FsgMMVBNarrow0.90
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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.