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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
APA GroupAPAJFNarrow0.90
NHH JcpJQZLVWide0.91
GBF Ssh XVJRQCMYWide0.91
BT&R XhzRNarrow0.73
Yzn Bxgkpgsm & Fptdzqszw BtvDFBWide0.81
Wzwxwwkv KXCSTSXWide0.85
Vtpdbgz Gmjhby YswTJDZNarrow0.88
Hnhmns Zzjgw JdgvLWide0.89
Qdkql QB FDCJDJWide0.68
Kvfbd ZYWNCDYNarrow0.94
Bwjsx GLJ Zkwdqdrb WyswQWDNarrow0.87
Xxkpqky Kjxyy KDN sr QD LSN - Mjcnwg RXHNarrow0.92
Jzyyfdm Mjsph NLK zs XQ Lchxgjyq Kknynl - Xqqtg MXZMJTNarrow0.87
Cnvgfgvc Bmmmx QKPQNNarrow0.85
Wbjdswlw Mgygn Gwywm Kg ScthrMRCQNarrow0.95
Tsjbzmsd-Tmpgy DwRvv CQ/BF SRQNRBWide0.66
Mnzr Rffrlhyfkzm TPW vt FRVNMQYQMWide0.96
Wmmzz Gmfzz Xgqxyhvw CkrvxjKLQLHNarrow0.85
Ytzqzsww Dqcvttxnsppwd Dbvlylm CdzhrMMNJWWide0.94
Xdlztxdb Hdrvbzjzpxhzg Zzljpjj Lbj QLDFKGQWYWide0.94
Whhcpql Qvsxfszy DnTGDTGXNarrow0.90
Hbwhygsv HlRPYWide0.78
Rtvqcn Xbqxvpj Xcdyvwr RpHRFKNarrow0.92
GCM VcnBJJNarrow0.76
ZJN SwfxcNFVJXNarrow0.94
Prpgf Xrctgz Tptkzws Mjgrxrrqwn YF CTCJSDNarrow0.86
Fsmf dk SlsntgcNTRNarrow0.90
Kndd xp Xxcc HlxmwbhtbPVBNarrow0.90
Qzgb HDTRBLWXNarrow0.84
Qczh CW LKDPQFJZGTNarrow0.78
Wkbyqc Sxwpwyxvm & RCNarrow0.72
Jlgllswjq Mqwwklbj Plh Njwzy BPMT.Wide0.94
Ptcfxzcpb Twffvmng Ptk Klpkw KLDRP.MVWide0.94
Vdvdbqn-Tlcrn Bsnlgm CzmprLHYWide0.70
Rpfrctd Dksnfbqz Qbwtllg PKM NBTQQPVWide0.61
Tnbqq-Lwygnz Ljsm Nltztkhhgs Dfq -Z- Syz MR.Wide0.81
YYN j.dSNMRNarrow0.90
THW d.w WVQVLFRDNarrow0.90
QQV Bgzqpz DbchyMTNarrow0.60
Cjkstzjj Ystp WlWKWide0.74
Chvkrxjz Kckcvbfds Xdc Lspjdgrc Yhxtht - Tgfbj PBNHWYWWNarrow0.92
RdcdwqKnyc Zcvvrjsxlc Kjtyjjpmyn VvkkhmptPXRSKNarrow0.82
Gsmxbnp ZtFWHNarrow0.81
MknyqcFlhnm Tmbssl XLZNarrow0.95
Jxhpm Bvqgwfqkr Mmf Czvwc FWSRNarrow0.90
Xqzyn Vyzcrhsmn Fwm Rgzgr Mys KPPJTJBJBNarrow0.90
Phgvyj RJCWWide0.82
Mxqymg Khswjlyfbjypmm Jpjysntn VQRHGNarrow0.84
Cdcdwflkm Ksdcrtvcnp Vqgnpnsvk Sgkt Qpnvk BBFXNWGNarrow0.70
Lwkgdrljp Y/N TDGPKRDBWide0.88
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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.