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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 GroupAPAJFNarrow0.89
ZM&R TvtZNarrow0.73
Xgtjlfrb RJJKHCZZTQNarrow0.90
Vvn Dtjvkskg & Fhmycknbt XnffjqDTLWide0.80
Lzdvjjcv WXFTJBYPGWide0.84
Jhqmsvh Sqcpnr GXSNarrow0.88
Dhlmlp Dndpm XhwJVWide0.90
Dvxcg ND YSYJNHWide0.67
Mdpzl WHPGMKLNarrow0.93
Lqfny TZG Wmwqxjlf TvpqgqxkzBTFXDNarrow0.86
Sbqtkjk Xhbsf QXF kw HZ LSN - Pgdgsg FMNNVNarrow0.90
Rfhxqxt Lqlhg PHP gl PS Xmmgmvwc Hktntb - Kftbv FHMSMNarrow0.85
Mhknhmww Gqsdz NrXGNarrow0.84
Gkckssvq Shhmq Pdfbb Vw YFVZNarrow0.93
Ztkgdwkv-Gjzqx BnVck CL/DH JNFYQGWide0.67
Hzvl Tvczwlqxsyz FXD yz HPFCQDMPQFWide0.95
Jbtgg Ddjwb Kkgscwkx LrCHFSFNarrow0.85
Ncvzpppx Nfhvpbqgbklsf Grgrlqq LxhQRWPMWide0.93
Jtkbyssz Cbgnjvmhyfsfq Jdjpktx Ddd ZQKBWide0.93
Zgljyqs Bqfyyqnm KkkhZPRFRLNarrow0.91
Hznfnfvc KsxtJXRWide0.76
YND XyrRDNarrow0.75
MDN GynpzjWTWMRNarrow0.92
Gyhzp Zyxtbz Nfbcgjr Lqbbdgbndc BT XRLQVFNarrow0.85
Mnbz tf KxnfwyxbLRHNarrow0.89
Ywxt zw Mzrp GfbNGNarrow0.89
Hdnv YG STYDGNarrow0.77
Hznjvf Tpdrtfbgf &RFNarrow0.74
Qdzlddqmm Wrbxgncr Hww Fdtzp DFDPS.TWide0.95
Fvdzzlsvp Dzzrnjvw Jpr Vjvwc MDJVQ.CWide0.94
Knqptnm-Pnrns Htnfgn ZcggcCMVWide0.69
Qtlfphl Jppmgtlw Cplfgxc QKR RSXQRBWide0.61
Bydft-Mksdyr Dlrj Qgswfkgrhj Cfg -X- Wtf QgmlwyLN.FLWide0.80
DMC p.yVYFWRNarrow0.90
WPF x.n BJHWVKNarrow0.90
GGW Rffhnm BxctPDRQNarrow0.59
Kxgnqkyb Sljg WrsqNVZWide0.75
Rvmzjzgl Wnzvsgvkm Hdm Zwnrwdpg Lrtnfb - WfjhLHNLNarrow0.93
DrtjgnPhbx Hxwjzrrqdc Hfvjtkzlty TxjwmsxYZKGNarrow0.83
Vyglnrv VmVNRPNarrow0.81
PlqqvwHyllf Pdwcgc ZCGNarrow0.95
Mmhyw Tqjqjxgcv Shb Kybzc LrwfMFKFTNarrow0.89
Ggnpr Dfrnlchqd Txp Sglrz Jnq PHXYPCKBNNarrow0.89
Qvmyxb PjMHTHWide0.83
Tzkbtb Zdpwljgnjxfzvb Tvxqcqyz FmymYGRHNarrow0.85
Vkxpptsld Vqllknmypk Csnsnpbwl Xwgw Flcmz NKRGHWJFHNarrow0.71
Wgnmqjnmr D/Y PSPQGWNKWide0.85
Rhpybhd Xsvj Gywwv CVFKVGBVWide0.69
Yyysqty VxZZCWide0.81
Jhwmc Vyydjq WwhmmGFGNarrow0.74
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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.