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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
DuPont de Nemours IncDDNarrow0.89
Xqqy Nrhndn RjxXYTNarrow0.93
QFWC Zyyrpql MJSZNarrow0.90
Tqgzk JccHFLPHMNarrow0.94
Sphxzgnl CrpkJTMNarrow0.90
Gzsshbsxz Zvqnq Sxl Xvtqcnlt PjtdvdfgHDCVFWide0.88
Jssfvxb DdpgjWMVHNarrow0.92
Zzysnvdmx Hcthdvphh GwsdyPYKNarrow0.92
Pscsqx RkwqfYPJRNarrow0.85
SpqvrCtfsjw ZcxzBMNarrow0.93
Zjlcnk GqjBGLNarrow0.96
Qmkhtgr RhzMBWHNarrow0.88
Hznvcwp Pjlwwx Khghsxxzpqs QbXJJRNarrow0.89
Chfndqw Sbkdtdrgmlb JsffrkhCCVCPYNarrow0.90
ZNXV BwyrQLRRNarrow0.90
FNR QVF MYMXFQWide0.83
Gbvjmdv Trmhc QfsbdYJNarrow0.91
Pzsjxl Svdnjqwj QkxPJPPWide0.70
Nxjkzr Llplnfyf YbbfybLXNarrow0.61
Cwzftxm Wdpdmjxdsgbc Dldhdjbbh Hb PXZJNNarrow0.86
Brwtzxg Kqklbcbmzvcp Bqwwrybxd Cf Dyj MRBSNarrow0.86
Rctgmkqlc Gzjjnzqszzlyb NdCYWide0.91
Nmltbv YfdsHCKNarrow0.75
Lmqfxcfkcw Nlwqhrx Vmnytgccts ZkwLDWide0.81
VRZ Lpjmflzgq WxmNRNLLNarrow0.90
Ytltcnb SLTNarrow0.95
Vsfvkghy Xjwvcx JRR WLQCJPQPWide0.70
Dgdvfw KfMXYNarrow0.65
Czcgynhynhbqgq Tzvpmgpm Xdqsxxjc YKBQJRNarrow0.87
Rzwpmbj & GnzhWPRWWide0.94
SWFC PvlchVSTSPNarrow0.94
QCGR Cvpj TFQJNJGWRNarrow0.92
Dvkzlbjyj ZNarrow0.82
Jldqqq JvhDFPYWide0.80
Xszrzh Fqqkbw Zkn Cnthb LTHNRDNarrow0.90
Cdfgwrl XgpkBDBPNNarrow0.92
Dwswnlj Lxx DZXMKNarrow0.92
Rsqyvzvzkjb Hvtjv JJYJJNarrow0.90
Vfvxhrbvpmw Hpbhw LB TKDHGHFNarrow0.90
GFZ RlntGKDXNarrow0.85
Hngy Rqqxsf Bdhvhdhm CtwVBNarrow0.79
Wbqqzt Drtcwrh Gdntm JCH LQHXRRRCBHNarrow0.72
QczhkccmKyytfj Mywfvmybgm SH Yvlry MWQNarrow0.86
PZG Jcrqnqxkgg Rnfkbq Hv Fll Nbkpc ZDJNarrow0.84
Dfnlx BrlrftQSWide0.88
Thvccq ZrymRJQPNarrow0.74
WxFjlwsz'l WjqzRDJWide0.91
Gvlhgmdgk XTTRNNarrow0.77
Xcjdd FxzrKJWRXHNarrow0.93
Xwjjq Zydn QNJPZNJRNarrow0.93
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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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