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Caerlaverock (Tamara Kulikova/Getty Images/iStockphoto)
Caerlaverock (Tamara Kulikova/Getty Images/iStockphoto)

NUMBER CRUNCHER

Moat stocks: 20 undervalued U.S. companies Add to ...

What are we looking for?

Undervalued U.S. stocks.

How we did it

Craig McGee, senior account manager at CPMS Morningstar Canada, used his company’s proprietary quantitative rating system to find U.S. stocks that might appeal to bargain hunters. The Morningstar ratings are based on a statistical model and include an estimate of each stock’s fair value as well as several other measurements of a stock’s quality. Mr. McGee selected the 20 most undervalued stocks that also met three additional criteria:

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A narrow or wide “Economic Moat.” A moat describes the strength of a company’s competitive position, with a wide moat indicating a strong, sustainable advantage over rivals.

Valuation uncertainty calculated as low or medium. This rating reflects Morningstar’s level of uncertainty about the accuracy of its quantitative fair value estimate.

Financial health calculated as strong or moderate. This rating reflects the probability that a company will face financial distress in the near future.

The 20 stocks listed in the accompanying table are sorted based on how far they’re trading below their estimated fair value.

About Morningstar

Morningstar Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individuals, financial advisers and institutions.

Morningstar provides data on approximately 422,000 investment offerings, including stocks, mutual funds and similar vehicles, along with real-time global market data on more than nine million equities, indexes, futures, options, commodities and precious metals, in addition to foreign exchange and treasury markets.

What did we find?

An indication that Carl Icahn might be on to something. The activist investor galvanized Apple Inc.’s share price this week when he tweeted that he thought the tech giant was deeply undervalued. The Morningstar evaluation (which is based on prices as of Monday) concurs.

Follow on Twitter: @IanMcGugan

 

U.S. quantitative valuations

Rank Company Symbol Market
Cap
($-mil)
1 Apple Inc. AAPL-Q 424,595
2 CenturyLink Inc. CTL-N 20,471
3 Phillips 66 PSX-N 35,544
4 Marathon Petroleum Corp. MPC-N 22,870
5 National Oilwell Varco, Inc. NOV-N 31,149
6 HollyFrontier Corp. HFC-N 8,990
7 Halliburton Co. HAL-N 42,043
8 Hess Corp. HES-N 25,800
9 Occidental Petroleum Corp. OXY-N 71,141
10 Carnival Corp. CCL-N 29,289

Prices in U.S. dollars. Source: Morningstar Canada

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  • AAPL-Q
  • CTL-N
  • PSX-N
  • PSX-N
  • MPC-N
  • NOV-N
  • HFC-N
  • HAL-N
  • HES-N
  • OXY-N
  • CCL-N
  • HCN-N
  • WLP-N
  • BRK.B-N
  • NBL-N
  • ORCL-N
  • KMI-N
  • ESRX-Q
  • SE-N
  • FNF-N
  • SLB-N
Live Discussion of AAPL on StockTwits
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Live Discussion of CTL on StockTwits
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Live Discussion of PSX on StockTwits
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Live Discussion of PSX on StockTwits
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Live Discussion of MPC on StockTwits
More Discussion on MPC-N
Live Discussion of NOV on StockTwits
More Discussion on NOV-N
Live Discussion of HFC on StockTwits
More Discussion on HFC-N
Live Discussion of HAL on StockTwits
More Discussion on HAL-N
Live Discussion of HES on StockTwits
More Discussion on HES-N
Live Discussion of OXY on StockTwits
More Discussion on OXY-N
Live Discussion of CCL on StockTwits
More Discussion on CCL-N
Live Discussion of HCN on StockTwits
More Discussion on HCN-N
Live Discussion of WLP on StockTwits
More Discussion on WLP-N
Live Discussion of BRK.B on StockTwits
More Discussion on BRK.B-N
Live Discussion of NBL on StockTwits
More Discussion on NBL-N
Live Discussion of ORCL on StockTwits
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Live Discussion of KMI on StockTwits
More Discussion on KMI-N
Live Discussion of ESRX on StockTwits
More Discussion on ESRX-Q
Live Discussion of SE on StockTwits
More Discussion on SE-N
Live Discussion of FNF on StockTwits
More Discussion on FNF-N
Live Discussion of SLB on StockTwits
More Discussion on SLB-N

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