With the S&P 500 down 25% year-to-date, you may be looking for buying opportunities in the stock market.
Morningstar has come up with a list of the Best Companies to Own. The companies are the ones for which Morningstar analysts assign a wide moat. This means that analysts believe they have competitive advantages that will help them generate returns that outweigh their costs over the next 20 years.
Morningstar said companies have predictable cash flows and make smart decisions about how they manage and invest their money.
Here are some of the stocks that appear on the list, all of which are undervalued, according to Morningstar analysts.
- Anheuser-Busch InBev (bud)
- Berkshire Hathaway (BRK.B)
- GSK (GSK) a pharmaceutical company in the United Kingdom
- Emerson Electric (EMR) Engineering company
- Microsoft (MSFT)
- Walt Disney (dis)
- nike (NKE)
- Comcast (CMCSA)
- Domino’s Pizza (DPZ)
- Starbucks (SBUX)
Take Morningstar on Berkshire Hathaway
Morningstar analyst Greggory Warren puts the fair value of the stock at $357. It was recently trading at $273.
“We still think so [Warren Buffett-led] “Berkshire, given its diversification and low overall risk profile, offers one of the best profiles of risk-adjusted returns in the financial services industry,” Warren wrote in a commentary.
He said the company “remains a strong candidate overall for protection against the downside during market sell-offs.”
“We continue to admire Berkshire’s ability in most years to deliver high single-digit growth in book value per share, which is comfortably above our estimate of cost of capital.”
Take a Morningstar on Emerson Electric
Morningstar analyst Joshua Aguilar puts the fair value of the stock at $113. It was recently trading at $78.
He wrote in a comment: “Emerson Electric is the undisputed powerhouse in the manufacturing process on the western side of the Atlantic.” “Emmerson is poised for several years of positive organic growth.”
Aguilar said the company’s total controllable automation market, both serviced and unserved, exceeds $200 billion.
“Emerson holds either the first or second stake in a variety of product categories. Depending on the category, Emerson has approximately the same mid-teens market share.”
Meanwhile, “the share of existing companies remains somewhat fragmented, indicating a large runway for [Emerson’s] Aguilar said.
Take Morningstar on Nike
Morningstar analyst David Swartz puts the fair value of the stock at $129. It was recently trading at $88.
“We view Nike as the leader in the sportswear market and believe it will overcome current challenges, despite near-term inventory and economic issues,” he wrote in a comment.
“Nike, the largest athletic footwear brand in all major categories and in all major markets, dominates categories such as running and basketball with popular shoe styles.”
The company’ faces great competition, [but] “We think he’s proven over a long period that he can maintain stock and pricing,” Schwartz said.
One smart strategy: “Nike has invested in its direct-to-consumer network with wholesale accounts cut off,” he said.