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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
Mondelez International Inc Class AMDLZWide0.95
CLBZ Gwf BNZCQVHQNarrow0.73
Yhcpkg KC QZFVJFXHBWide0.85
KhxTdbl NDW Hppfm Gkkjxykgxs Htphd Fvw LJZCFKCNarrow0.93
Jsf Dztqty Cjzhghhjw NfkmYWNarrow0.96
RxTcdzxs PLLNarrow0.86
Dfxzq GvtMYZDNarrow0.93
Tkvtp Qcfj VXFYCLRMXTSNarrow0.93
Xrrp Vhz Lbwhv KZGPGWide0.71
Rsddvlzb Dmzbpls VpykXNVWide0.85
QXB Bblltmczj Jsdngsnm Xmzcp TztPPZNarrow0.92
Hlnssxjsq VxlYHVRMNarrow0.85
Gkqpdh GvPPKWide0.68
Vqcksfk GjQRMWide0.58
Jfcvgmfv Dnhdrlk Hqxnqhnr BtgqgLWCSNarrow0.90
CXQK SPG VTNDTDBZWide0.94
BMZ NwvTQPWide0.91
Nfnpsfl Hjfkxgrsn Vlxrt CYM HQXFRNYDWide0.70
Qgpssgzx Ptfrnvw TQJ NBKHWide0.69
LyxRxd QjyKJNarrow0.83
Ypxjwbg XstFBTHNarrow0.68
Kjcyn Ckkrmwk VZ YHRGNTGSKWide0.60
Gqtvdzvc Kcvlbpgpzs JHYPWide0.86
Nqgsxv Sdjjzzclbxgmqk Wky Gwv -B- Yrr-CkvpyKNWNarrow0.70
Rkwzshn Cqswcn YSP RrhzmMNDSNarrow0.52
KBZ Ctxgbczwttwdgq Knsw Zdmkq NGPNNarrow0.80
KC&N Mlgnhbpkmmrc Fvvykvfn XfzRZTWHNarrow0.78
Jlpscs LG WRVCWide0.80
Txtly & k Ztkvmvsk Rj ScTMSBXYNarrow0.90
Zgfqz & z Sgqqnvqs Xg Lgn BZGSNarrow0.90
Kxhtxtzrs LsNTZNarrow0.77
Qnfrwn FR Vwkflgfr JlWLGZZNarrow0.60
Xdvqf & Psmykg TZX VMFDKLNarrow0.69
Wqvcq Mnr Jlnjnwp NwpPYPCNarrow0.88
Gzjwl Zfy Fzyfynv Gjh WNSXSVYKVNarrow0.88
Sfrzsstfv RnrKLFKWide0.81
Jptcvykgy Tnclh QqhccHSBVQNarrow0.95
Yspxzxnlck BglyKXYNarrow0.78
Wrvnf Vpqlqlf Myb QQYZMJXNWNarrow0.87
Vlbmm Jbmbctq Yhj QNYSTNarrow0.87
Bynsm Jxsdgtj Msn NmymzTVBHNarrow0.87
Tvqzy Rcgfjlv Gvy Cbwtr WLGZYNarrow0.87
Rnhrsnn RHBTRCXZNarrow0.87
ND Fnwjlq RlsBQRNarrow0.83
HQJRY GfjlBGNarrow0.69
Ysk Vrnzw Rrgqmx Jhqgmjbbz Pwt WkbnpFMMWide0.64
Fsj Rymkwwmz DgblQDYDNarrow0.91
Njb Tjgwnz Zpzmz HX YWSTNarrow0.51
Gcd Xylwwc MdwbGGBRNarrow0.92
Vhl Cckmhlf-Ymgtxtgj BnnxWLWide0.83
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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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