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Stocks

Wide-Moat & Undervalued

Start your stock-picking here: High-quality companies at a good price.

List of investments
Name
Ticker
Morningstar Rating
Market 1-Year Return (%)
Market 3-Year Return (%)
Market 5-Year Return (%)
Moat Rating
Price/Fair Value Ratio
Wide
Wide
Wide
None
Wide
Wide
None
None
Narrow
Narrow
Wide
None
Wide
Narrow
Wide
None
Wide
None
None
Wide
None
None
Wide
None
Wide
None
None
Narrow
None
Wide
None
Wide
None
Wide
Wide
Wide
Wide
Wide
None
None
Wide
Wide
None
Wide
None
Wide
Wide
None
Wide
None
Wide
None
None
None
None
None
Wide
Narrow
Wide
Wide
Wide
Wide
None
Narrow
Wide
Narrow
Wide
None
Wide
Wide
Wide
None
None
Wide
None
Wide
Wide
Wide
None
Narrow
Wide
Wide
Wide
Wide

Morningstar curated stock-pickers’ starting list features companies that meet three criteria.

  1. They are trading at a discount to Morningstar analysts’ estimates of their fair value (in other words, 4- or 5- star stocks).
  2. They have “wide” economic moat ratings. Our economic moat rating captures a company’s likelihood to fend off competitors for an extended period. Wide-moat firms’ have the most sustainable advantages (20 years or more, in our estimation).
  3. They have a Fair Value Uncertainty rating of Medium or lower. We are more confident in our fair value estimates for companies with these ratings.

List Criteria

Wide-Moat Stocks

Morningstar’s ratings for economic moat 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. 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.

4- and 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.

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.