10 Undervalued High Quality Stocks

These
companies
have
significant
competitive
advantages
(an
economic
moat)
and
our
analysts
believe
that
these
advantages
are
stable
or
growing.
The
best
businesses
have
predictable
cash
flows
and
are
managed
by
teams
that
have
a
history
of
making
smart
capital
allocation
decisions.

A
company’s
longevity
and
competitive
advantage
are
inherently
tied
to
sustainability,
so our
analysis
takes
environmental,
social,
and
governance,
or
ESG,
considerations into
account.
The
best
companies
have
business
models
that
allow
them
to
effectively
navigate
evolving
ESG
issues
that
could
materially
impact
their
business.
Cutting
corners
or
taking
on
too
much
risk
may
work
in
the
short
run,
but
these
tactics
won’t
give
a
company
enduring
success.

The
companies
that
make
our
list
also
have
predictable
cash
flows
(or
predictable
amounts
of
money
going
into
and
out
of
a
company),
so
our
analysts
can
more
accurately
estimate
how
much
the
businesses
are
worth.
These
companies
also
make
smart
decisions
about
how
they
manage
and
invest
their
money.

When
you
buy
a
share,
in
fact,
you
own
a
piece
of
that
company.
It
is
important
to
understand
the
quality
of
the
company
you
own,
for
the
same
reason
you
would
test
drive
a
new
car
before
buying
it.

The
idea
behind
this
list
is
that,
in
the
long
run,
our
analysts
believe
that
a
stake
in
a
solid,
high-quality
business
puts
investors
in
a
far
better
position
than
the
option
of
chasing
market
movements
or
the
short-lived
boom
of
a
low-quality
company.

But
is
the
Share
Price
Right?

Beware,
though,
the
best
companies
are
not
always
the
best
stocks
to
buy.
The
price
you
pay
to
own
a
company,
solid
or
not,
is
also
very
important.
This
is
why
we
are
focusing
on
the
best
companies
with
the
most
undervalued
share
prices
to
date.

And
more
precisely,
in
this
article
we
focus
on
the
10
best
European
companies
with
an
economic
moat,
with
an
‘exemplary’
Morningstar
Capital
Allocation
Rating
(a
judgment
on
how
the
company’s
management
is
able
to
increase
shareholders’
returns),
with
a
positive
Morningstar
Rating
(which
means
that
they
are
undervalued
compared
to
the
fair
value
estimated
by
our
analysis),
and
with
a

medium
or

low

Uncertainty
Rating.

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