The 10 Best Companies To Invest in Now

Investors have endured a lot of stock market volatility during the past few years. Given ongoing uncertainty about interest rates and the economy, investors may be wondering which stocks to buy now against this backdrop.

Regardless of where interest rates and the economy are headed, investors may want to own companies that offer some sense of certainty in terms of cash flows and company fundamentals. That’s where Morningstar’s Best Companies to Own list comes in. The companies that make up this list—131 in total—have significant competitive advantages. We believe the best companies have predictable cash flows and are run by management teams that have a history of making smart capital-allocation decisions.

But the best firms aren’t always the best stocks to buy. How much an investor pays to own a company—best or otherwise—is important, too. So, here we’re focusing on the 10 best companies with the most undervalued stock prices today.

10 Best Stocks to Buy Now—September 2023

The 10 most undervalued stocks from our Best Companies to Own list, as of Aug. 29, 2023, were:

1. Yum China YUMC
2. Estee Lauder EL
3. Anheuser-Busch InBev BUD
4. GSK PLC GSK
5. Roche Holding RHHBY
6. Imperial Brands IMBBY
7. Zimmer Biomet ZBH
8. Wells Fargo WFC
9. Campbell Soup CPB
10. Taiwan Semiconductor Manufacturing TSM

Here’s a little bit about why we like each of these companies at these prices, along with some key Morningstar metrics. All data is as of market close on Aug. 29, 2023.

Yum China

• Price/Fair Value: 0.64
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Restaurants

Yum China leads our list of the best stocks to buy this month: The stock is 36% undervalued relative to our fair value estimate of $84. Morningstar senior analyst Ivan Su argues that there’s reason to be confident about restaurants such as Yum China (whose brands include KFC, Pizza Hut, and Taco Bell, among others) that have the scale to be aggressive on pricing; that provide customers greater access via robust digital ordering, delivery, and drive-through options; and that boast healthy balance sheets. Second-quarter results were solid, with revenue up 25% year-over-year, same-store sales growth of 15%, and a significant improvement in profitability.

Estee Lauder

• Price/Fair Value: 0.64
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Household & Personal Products

Estee Lauder stock is trading 36% below our fair value estimate. A leader in the global beauty prestige market with brands that include its namesake, Clinique, and Aveda, Estee Lauder is considered a preferred vendor across brick-and-mortar and digital channels. Given its brand equity and cost advantages, we assign the company a wide economic moat rating, explains Morningstar analyst Dan Su. We expect the company to benefit from a consumer shift in both developed and emerging markets toward premium beauty brands. We think Estee Lauder stock is worth $249 per share.

Anheuser-Busch InBev

• Price/Fair Value: 0.64
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Beverages—Brewers

Anheuser-Busch InBev’s second-quarter performance in the United States was disastrous: The boycott around the marketing of Bud Light in the United States led to a loss in market share for the brewer. Management noted, however, that Bud Light’s market share hasn’t worsened since April, reports Morningstar director Philip Gorham. We think there’s plenty of upside with the stock for patient investors. The brewer has a vast global scale and regional density. The company has a history of buying brands with promising growth platforms and then expanding distribution while ruthlessly squeezing costs from the businesses, which contributes to its Morningstar Capital Allocation Rating of Exemplary. The stock trades 36% below our fair value estimate of $90.

GSK

• Price/Fair Value: 0.66
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Drug Manufacturers—General

One of the largest pharmaceutical and vaccine companies, GSK’s innovative new product lineup and expansive list of patent-protected drugs earn a wide Morningstar Economic Moat Rating, says Morningstar director Damien Conover. GSK reported solid earnings in the most recent quarter. Conover thinks the market underappreciates the global growth potential for the company’s shingles and RSV vaccines, and remains overly concerned about Zantac litigation. GSK stock trades 34% below our fair value estimate of $54 today.

Roche Holding

• Price/Fair Value: 0.66
• Morningstar Uncertainty Rating: Low
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Drug Manufacturers—General

The second drugmaker on this month’s best stocks to buy now list, Roche stock trades 34% below our fair value estimate of $56. The company’s drug portfolio and industry-leading diagnostics provide significant competitive advantages and underpin our wide economic moat rating, says Morningstar strategist Karen Andersen. “This Swiss healthcare giant is in a unique position to guide healthcare into a safer, more personalized, and more cost-effective endeavor,” she notes. With its biologics focus and innovative pipeline, we expect Roche to continue to achieve growth as its blockbusters face competition.

Imperial Brands

• Price/Fair Value: 0.67
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Tobacco

Imperial Brands stock trades 33% below our fair value estimate. Morningstar director Philip Gorham refers to this Big Tobacco name as a “fast follower” rather than a leader in most markets. As a result, the company is likely to be more exposed to cigarettes in the future relative to its peers, who are investing for growth and moving away from the secular decline in cigarettes. Gorham nevertheless says Imperial Brands should remain a highly profitable and cash-generative business. We think Imperial Brands stock is worth $34 per share.

Zimmer Biomet

• Price/Fair Value: 0.68
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Medical Devices

This month, Zimmer Biomet returns to our list of the best companies to invest in, trading 32% below our fair value estimate. Zimmer manufactures orthopedic reconstructive implants. We award the company a wide economic moat rating thanks in part to the high switching costs that orthopedic surgeons would face if they transitioned to another company’s instrumentation, says Morningstar senior analyst Debbie Wang. We were surprised by the recent CEO change announcement, but considering how well the current business strategy is working, we don’t expect new management will bring wholesale changes, she adds. We think Zimmer Biomet stock is worth $175 per share.

Wells Fargo

• Price/Fair Value: 0.69
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Banks—Diversified

Wells Fargo stock trades 31% below our fair value estimate of $61. Wells Fargo remains one of the top deposit-gatherers in the U.S. behind JPMorgan Chase JPM and Bank of America BAC. However, the bank is in the midst of a multiyear rebuild, with years of expense savings related projects ahead and additional investment in its existing franchises, says Morningstar strategist Eric Compton. The bank also has a sizable presence in the middle-market commercial space and boasts a large advisor network, which support its wide economic moat rating. Second-quarter results were decent, adds Compton, and management’s forecast included expenses inching up a bit but full-year net interest income rising.

Campbell Soup

• Price/Fair Value: 0.69
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Standard
• Industry: Packaged Foods

Campbell Soup stock makes its debut on our list of the best stocks to buy now. Undervalued by 31%, this leading packaged food manufacturer earns a wide economic moat rating thanks to its cost advantages and brands, which include its namesake brand, Pace, Prego, and Swanson, among others. We think Campbell’s strategy is sound, as it leverages technology, data insights, and artificial intelligence to bring consumer-valued products to the shelf in a timely fashion, argues Morningstar director Erin Lash. We’re forecasting low-single-digit annual sales growth and high-single-digit adjusted average earnings per share growth over the next decade, she adds. We think shares are worth $61.

Taiwan Semiconductor Manufacturing

• Price/Fair Value: 0.69
• Morningstar Uncertainty Rating: Medium
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Semiconductors

The stock of the world’s largest dedicated contract chip manufacturer rounds out our list of the best stocks to buy this month. We believe Taiwan Semiconductor will be a significant beneficiary in high-performance computing, including generative artificial intelligence, says Morningstar analyst Phelix Lee. While recently tapered guidance may pose short-term downside, we remain bullish long-term, reiterates Lee. Taiwan Semiconductor stock trades 31% below our fair value estimate of $137.

Find More of the Best Stocks To Invest In

You can review all of the companies on our Best Companies to Own list and dig into our methodology, which includes definitions for the key Morningstar metrics included in this article. Those with specific interests can drill down with our Best International Companies to Own, Best Sustainable Companies to Own, and Best Innovative Companies to Own lists, too. And as we outline here, we suggest that you focus your research on the undervalued stocks of the companies on these lists.