Morningstar Advisor - Spring 2007 - (Page 66)

By the Numbers: Stocks Undervalued Stocks with Wide Moats Undervalued stocks with significant competitive advantages can make attractive longterm holdings. With that in mind, we scoured our 1,900-plus stock coverage universe for high-quality stocks (those boasting wide economic moats) that are trading on the cheap (rated 4 or 5 stars by our analysts). There were 73 stocks that fit that profile as of March 31, 2007. 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. Name Industry Market Cap ($Mil) EPS TTM P/E Ratio (trailing) Revenue Growth % 3 Yr EPS Growth % 3 Yr Dividend Yield % Current ROE % (trailing) 3M Company MMM Allied Irish Banks ADR AIB American Express AXP Amgen AMGN Anheuser-Busch Companies BUD Apollo Group A APOL Autodesk ADSK Automatic Data Processing ADP Bank of America BAC Bank of New York Company BK Barclays PLC ADR BCS Berkshire Hathaway B BRK.B Biogen Idec BIIB Calamos Asset Management A CLMS Capital One Financial COF Checkfree CKFR Chicago Mercantile Exchange Holdings CME Cintas CTAS Cisco Systems CSCO Citigroup C Coca-Cola KO Dassault Systemes SA ADR DASTY Dell DELL eBay EBAY Electronic Arts ERTS Expeditors International of Washington EXPD Fastenal FAST Federated Investors B FII Forward Air FWRD Genzyme GENZ Diversified International Banks Finance Biotechnology Alcoholic Drinks Education Business Applications Data Processing International Banks International Banks International Banks Insurance (General) Biotechnology Money Management Finance Systems & Security Securities Business Support Data Networking International Banks Beverage Mfg. Development Tools Computer Equipment Online Retail Entertainment/Education Media Transportation - Misc Distributors Money Management Land Transport Biotechnology 56,847 26,575 66,676 65,062 38,953 7,657 8,918 25,352 227,462 30,824 93,968 167,468 15,345 532 30,532 3,293 19,197 5,742 156,135 252,038 113,426 6,258 52,406 46,271 15,946 8,974 5,339 3,893 1,001 15,923 5.06 3.75 2.99 2.48 2.53 — 1.22 2.85 4.59 3.93 3.84 238.13 0.63 1.45 7.62 1.44 11.60 2.06 1.03 4.31 2.16 1.87 1.42 0.79 0.27 1.06 1.32 1.86 1.55 –0.06 15.31 15.98 18.58 22.47 20.18 — 31.55 22.81 11.08 21.13 15.08 15.19 72.27 15.75 9.76 27.30 47.49 17.45 25.10 12.10 22.68 29.15 16.25 42.79 — 39.55 26.75 20.88 21.25 — 7.93 –1.76 11.55 19.52 3.24 30.66 22.68 9.89 — 6.70 15.24 15.56 58.08 44.03 13.83 17.31 27.09 8.21 14.70 4.99 4.92 6.48 16.45 40.23 5.94 20.79 22.06 — 13.46 22.97 18.77 8.96 9.14 13.64 2.64 40.05 111.79 — — 37.25 16.35 10.40 — — 16.25 — 47.70 10.19 21.19 8.02 6.86 10.98 22.21 32.45 –11.45 32.08 33.09 2.84 25.19 — 2.43 3.11 1.01 0.00 2.29 0.00 0.00 1.72 4.27 2.15 4.93 0.00 0.00 1.70 0.14 0.00 0.52 1.08 0.00 3.92 2.65 0.74 0.00 0.00 0.00 0.53 1.17 1.96 0.85 0.00 38.67 21.03 35.27 15.56 49.90 — 35.60 27.59 15.94 25.97 16.65 10.16 3.04 15.85 9.57 9.45 26.82 16.19 24.35 18.13 30.02 18.72 100.77 10.32 2.19 21.97 21.59 37.35 26.41 –0.30 66 Morningstar Advisor Spring 2007

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

Morningstar Advisor Spring 2007 Features Departments Letter from Joe Mansueto Get to Know Morningstar’s Fund Managers of the Year Is Your Client a Stock or a Bond? Less Alpha, More Beta Than Meets the Eye Your Mileage May Vary A Clear-Eyed Look at Hedge Funds Lower Risk, Higher Returns, What’s Not to Like? Without Cash and Clout, Advisors and Clients Get Short End of Stick Get the Strategy Minus the Headaches Analyzing Funds of Hedge Funds Not All Hedge Funds Are Created Equal A Fund with a (Long) View Laying Low and Prospering A Menu of Ideas to Fill Five Market Baskets Oil and Gas Gushing with Values Mutual Fund Analyst Picks Undervalued Stocks Most Popular Variable Annuities What’s New at Morningstar and on the Web You Can’t Always Get What You Want

Morningstar Advisor - Spring 2007

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