Wide-moat companies carry sound balance sheets and significant competitive advantages—two desirable qualities in the face of today’s economic uncertainty.
The constituents of the Morningstar Wide Moat Focus Index are a fertile hunting ground for long-term investors looking for high-quality stocks to buy that are trading at cheap prices.
10 Cheap Wide-Moat US Stocks for 2025
These were 10 of the most undervalued wide-moat stocks in the Morningstar Wide Moat Focus Index as of March 24, 2025.
- Estee Lauder EL
- Nike NKE
- Pfizer PFE
- Campbell Company CPB
- International Flavors & Fragrances IFF
- Brown-Forman BF.B
- Constellation Brands STZ
- Huntington Ingalls Industries HII
- Adobe ADBE
- NXP Semiconductors NXPI
The most undervalued wide-moat stock on the list, Estee Lauder, was trading 44% below our fair value estimate as of March 24, while the last company on the list, NXP Semiconductors, was trading 30% below our fair value estimate. We think all 10 of these names are high-quality stock ideas for long-term investors to consider.
To keep the index focused on the least-expensive high-quality stocks, Morningstar reconstitutes it regularly. The index consists of two subportfolios containing 40 stocks each, many of which are overlapping positions. The subportfolios are reconstituted semiannually in alternating quarters on a “staggered” schedule.
Morningstar reevaluates the index’s holdings and adds and removes stocks based on a preset methodology. Because stocks are equally weighted within each subportfolio, the reconstitution process also involves rightsizing positions.
After the most recent reconstitution, half the portfolio added nine stocks and eliminated nine stocks.
9 Undervalued Stocks Added to the Morningstar Wide Moat Focus Index
These cheap stocks were added to the reconstituted subportfolio of the Morningstar Wide Moat Focus Index on March 21.
Six of the cheap wide-moat stocks added to the index hail from the technology sector, which looks undervalued today after falling 7% so far this year.
9 Stocks Removed From the Morningstar Wide Moat Focus Index
These stocks were removed from the reconstituted subportfolio of the Morningstar Wide Moat Focus Index on March 21.
Bio-Rad Laboratories BIO was booted from the reconstituted portfolio after its market capitalization fell below the index’s requirements.
That being said, the stocks that were removed shouldn’t always be considered stocks to sell, especially when the removed stocks are still trading in what we’d consider a buying range. They’re just not as undervalued as the stocks added to the index at the time of the reconstitution.
What Are Wide-Moat Stocks?
Morningstar thinks that companies with wide economic moats have significant advantages that allow them to successfully fend off competitors for decades. Companies can carve out their economic moats in a variety of different ways: by having high switching costs, through strong brand identities, or by possessing economies of scale, to name just a few.
Over time, we’ve found that the strategy of investing in wide-moat stocks trading at a discount to their fair values has been an effective approach to stock investing.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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