Morningstar Advisor - Fall 2007 - (Page 86)

By the Numbers: Stocks Undervalued Stocks with Wide Moats Undervalued stocks with significant competitive advantages can make attractive long-term holdings. With that in mind, we scoured our 2,000-plus stock coverage universe for highquality stocks (those boasting wide economic moats) that are trading on the cheap (rated 4 or 5 stars by our analysts). Our analysts award wide economic moats to companies they believe possess durable competitive advantages that are likely to confer economic profits well into the future. Barriers to entry, switching costs, scale advantages, and patent protection are examples of such advantages. In addition, our analysts estimate the fair value of each stock based on in-depth fundamental analysis. When a stock trades at a suitably wide discount to our fair-value estimate, we award it 4 or 5 stars. The wider the discount, the higher the star rating, and vice versa. There were 69 stocks that fit that profile as of September 30, 2007. Name Industry Market Cap ($Mil) EPS TTM P/E Ratio (trailing) Revenue Growth % 3 Yr EPS Growth % 3 Yr Dividend Yield % Current ROE % (trailing) Pg# 3M Company MMM Allied Irish Banks ADR AIB American Express Company AXP Amgen, Inc. AMGN Anheuser-Busch Companies, Inc. BUD Apollo Group, Inc. A APOL ARM Holdings PLC ADR ARMHY Automatic Data Processing ADP Avon Products AVP Bank of America Corporation BAC Bank of Montreal BMO Barclays PLC ADR BCS Berkshire Hathaway Inc. B BRK.B Boardwalk Pipeline Partners LP BWP Boston Scientific, Inc. BSX Brown & Brown, Inc. BRO Buckeye GP Holdings L.P. Trust Unit BGH Buckeye Partners, LP BPL Cadbury Schweppes PLC ADR CSG Campbell Soup Company CPB Capital One Financial Corporation COF Cintas Corporation CTAS Citigroup, Inc. C Comcast Corporation CMCSK Corporate Executive Board Company EXBD Credit Suisse Group ADR CS Dell, Inc. DELL DeVry, Inc. DV Diageo PLC ADR DEO eBay, Inc. EBAY Enterprise GP Holdings LP EPE Expeditors International of Washington, Inc. EXPD Fastenal Company FAST Diversified International Banks Finance Biotechnology Alcoholic Drinks Education Semiconductors Data Processing Household & Personal Products International Banks International Banks International Banks Insurance (General) Pipelines Medical Equipment Insurance (General) Pipelines Pipelines Food Mfg. Food Mfg. Finance Business Support International Banks Cable TV Consultants International Banks Computer Equipment Education Alcoholic Drinks Online Retail Natural Gas Utilities Transportation - Misc Distributors 67,208 22,258 71,706 60,904 38,003 10,629 4,360 24,992 16,462 229,500 32,788 79,429 185,703 3,506 20,675 3,649 808 2,016 24,360 14,078 28,954 5,986 238,082 73,402 2,701 73,289 63,060 2,699 64,286 53,428 4,557 10,336 7,066 5.85 4.89 3.29 3.48 2.62 2.18 0.10 2.04 1.20 4.78 5.15 2.79 260.44 1.87 1.01 1.34 0.45 2.91 2.24 2.16 6.49 2.09 4.39 0.95 2.05 9.83 1.42 1.07 2.20 0.99 1.25 1.13 1.42 16.05 — 18.42 16.10 19.34 28.17 — 25.71 31.75 10.82 — — 15.34 16.13 13.74 19.42 63.29 16.81 — 17.61 10.68 18.05 11.03 26.67 36.50 11.27 19.53 35.46 — 39.68 29.59 42.92 33.00 7.93 11.13 11.55 19.52 3.57 22.77 27.15 11.84 8.59 24.42 3.07 20.28 15.56 — 31.04 16.80 19.16 19.16 4.86 — 13.83 9.62 4.99 12.94 29.89 -10.59 16.45 5.96 -5.59 40.23 37.80 20.79 22.06 20.67 47.71 9.14 13.64 2.64 23.42 35.02 20.02 -8.64 8.74 14.40 18.36 10.40 — — 15.10 — 35.98 45.63 11.22 16.25 10.72 8.01 -5.96 27.77 149.88 22.20 13.08 6.21 32.45 — 32.08 33.08 2.02 3.97 0.99 — 2.40 — 0.78 1.95 1.92 4.49 3.57 5.05 — 5.59 — 0.92 3.26 6.49 2.47 1.64 0.15 1.03 4.41 — 2.01 3.19 — 0.26 2.92 — 3.87 0.52 0.94 42.40 29.14 37.64 24.68 51.75 40.38 7.38 20.41 85.38 16.32 18.41 20.05 10.47 — 3.72 18.54 — — 34.66 55.76 9.54 15.72 17.20 7.25 65.57 26.43 100.77 12.63 36.72 11.96 — 22.53 21.71 79 79 40 43 80 36 36 34 86 Morningstar Advisor Fall 2007

Table of Contents Feed for the Digital Edition of Morningstar Advisor - Fall 2007

Morningstar Advisor Fall 2007 Features Departments Letter from the Editor Inbox 10 Years After: Developing Markets Make Progress Research Briefs Investors Should Adjust Their Home Bias Few Mutual Funds Exhibit Serial Correlation Valuating ETFs, the Equity Analyst's Way It’s All About Location See the World (Differently) The Return of the Global Flexible Investor Map of International Value Sound as a Loonie? Fair Exchange In Their Own Worlds A Good Read Putting Their Heads Together Buying Protection Scoping Out Easy-to-Use Funds Finding Good Stewards Consumer Firms Go Global Mutual Fund Analyst Picks Undervalued Stocks Most Popular Variable Annuities New at Morningstar The Whole Wide World

Morningstar Advisor - Fall 2007

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