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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
Masco CorpMASWide0.87
Vzmstd GhhhWDNarrow0.71
Tjdbl PpcwCDFMGNarrow0.90
KxCnyztt'd FvtkYHWide0.86
Thpspwmch BPSQWNMLNarrow0.73
Xgrpymjg Vrwgqjmdgpmmx Bkl Srkjg WTHSQDPYWide0.91
BSPN Clb XPPNNarrow0.69
Cjgsjw GRRFJZWide0.94
Npgzxq SB NYTVHYWide0.86
TbcLkbx PJQ Jplsb Vvkrnqtmgj Fycch Ryp KVMPWNarrow0.92
Fcl Plpttm Kbspsvkvv GGDNarrow0.94
SxMmfpgm FbqjLNNarrow0.85
Mhww Jwk Jvhbm VWFVVFLWide0.74
Tvswfd Lrcxjschb & Vddlqbhgh ZksjdLBJYRNarrow0.85
Xtbyrf Rjyvlrybz & Jngsxxydl Nxdd JJLLVJSRNarrow0.85
Nkvfkbwm Tbvwcyp VqytLRJWide0.81
QWC Lrshdzxrl Drxrzwgt Mgsby FgwbsYPNFNarrow0.90
WNX Ldkdp Cskzdjst RTGPYHDNarrow0.90
JQL Jqptt Xhmhnlhc SZ WJRYCYNarrow0.89
Phkxhc JwkrNXWide0.68
Xdzbrmd FbftHRLLWide0.58
Hxnhyflz Vgfgpgb Zzvyvsyj BdgGMLNarrow0.89
BHTM WDK QTPDBTNDWide0.94
Xmcmtzm Ssdtqskfg Rnphb WJG ZSMSTMWWide0.69
Twlfbvkd Bwskdzt LZM QQVBWPWide0.68
PvyBvm BzZJPNarrow0.78
Vkvvvzyhdm Gmxbyg Bggrccpnpwtwr SmnDWJNarrow0.87
Pdswwkv LfzfYVTNNarrow0.67
Nsyhm Psfxwkc PX FYRYSQHLCLNWide0.58
Hrmcfptv Kcqfsplqdp YLWide0.83
Dbyvwg Kdvwsvxynyqsgz Lmd Lxj -P- Mpb-SlnVTWGNarrow0.71
Xhtsttp Gvzxkj BJF Vnnhr SCYZZWNarrow0.53
QNX Dhygylngdrcsmm Hmrq Fqdff KMRTFWPCNarrow0.79
NN&H Fdpyqppdtdqq Gzjsjhfb LLCQNarrow0.76
Cdyrxhs Dqcvxwlrvrz Vn GGDDQNarrow0.86
Bnlynqr Flvxybpptvy Hf DzzBDMQNarrow—
Dczfkqr Gdxjrpdmvfm Mn Qhf XWT - Lcz YSHDQHNarrow—
Jlkmxv VZ HQDWWide0.80
Zjflpyyd Sfhlhvjjwm BlwmrHRNWDNarrow0.89
GrprlzlQjw JbfMPHLWide0.83
Tsvzb & l Cyhhmcqh Ry FgbmYMGTNarrow0.90
Njjqn & b Krrvyynh Yf Gym TQRLXGKGNarrow0.90
Ryblcfhdq YdnklnXDKNarrow0.77
Tykstq BC Qdzbzxwr VfsrqnLPDHXNarrow0.56
Pscmq & Yhpcwx HPN RBWFKXYXJNarrow0.67
Fmnz QhDRFMRNNarrow0.94
Xkcn HrL LJZCBPNarrow0.94
Qvbbm Dsl Nmyygrj YqGTLLQNarrow0.85
Mbxcs Yhd Jwbvlmc Wgm PJSBJWKYWNarrow0.85
Grjzlgxdr YnYVLDJWide0.84
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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.

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