With the S&P 500 down 19% so far in 2022, you might see this as a buying opportunity.
But, of course, you’ll want to be a little wary, as massive inflation, higher interest rates, and a potential economic downturn could push stocks further lower.
However, Morningstar has created a list of 10 stocks to consider now, using its list of the 127 best stocks to own and liquidating the 10 most undervalued stocks as of September 12.
methodology
Susan Dzyubinsky, Director of Content at Morningstar.com, wrote in a comment that the companies on the Top Stock List “have significant competitive advantages, and we believe these advantages are stable or growing.”
“We believe the best companies have predictable cash flows and are managed by management teams with a history of making smart capital allocation decisions.”
Valuation ratings are determined by comparing the stock’s September 12 price to fair value estimates by Morningstar analysts. Here is the list:
1. Taiwan’s semiconductor industry (TSM) , a semiconductor maker. Price / fair value: 0.49,000
2. Anheuser-Busch InBev (bud) , the brewer. Price / fair value: 0.57,000
3. yum china (you can) , the owner of fast food restaurants in China, including Kentucky Fried Chicken. Price / fair value: 0.58,000
4. Comcast (CMCSA) , Media / Communications Company. Price / fair value: 0.59,000
5. GSK (GSK) UK-based pharmaceutical company. Price / Fair Value: 0.60.000
6. Equifax (EFX) Credit reporting agency. Price / Fair Value: 0.62.000
7. Veeva . Systems (VEEV) Cloud solutions provider. Price / Fair Value: 0.66,000
8. Zimmer Biomite (ZBH) , a manufacturer of medical devices. Price / Fair Value: 0.68,000
9. sales force (CRM) , a commercial software company. Price / Fair Value: 0.69,000
10. masco (Diamonds) maker of home improvement products. Price / Fair Value: 0.70.000
Take Morningstar in Taiwan quasi
“We note two long-term growth factors for TSMC,” Morningstar analyst Felix Lee wrote in a comment. “First, the recent consolidation of semiconductor companies is expected to create demand for integrated systems made from the most advanced nodes.”
As an example, โNvidiaโs major client (NVDA) Acquires Arm to standardize intellectual property and advance cutting-edge offerings in data centers, artificial intelligence, and the Internet of Things.
Second, the organic growth of artificial intelligence, the Internet of Things, and high-performance computing applications could continue for decades.
Morningstar takes on Anheuser-Busch
“AB InBev has one of the strongest cost advantages in our consumer defense coverage and is among the most efficient operators,” Morningstar analyst Philip Gorham wrote in a comment.
โThe broad global reach, combined with monopoly-like positions in Latin America and Africa, gives AB InBev a significant increase in fixed cost and purchase pricing power.โ
As a result, the company enjoys “excess returns on invested capital, best-in-class operating cycles and cash, asset turnover rates, and working capital management,” Gorham said.
