Price/Fair Value Ratio
The stocks on this list are the current constituents of the Morningstar Wide-Moat Focus Index. The index is composed of the most undervalued (trading at the lowest current market price/fair value ratios), highest-quality companies in our coverage universe. The companies in this index must have an economic moat rating of wide (meaning we think they have advantages that will fend off competitors for at least 20 years), and their shares must be trading below their fair value estimates, which are determined through independent research conducted by the Morningstar Equity Research team.
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.
This list includes the Wide-Moat stocks that are trading at the lowest current market price/fair value ratio