Morningstar Advisor - April/May 2011 - (Page 76)

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 high-quality 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 that they believe possess durable competitive advantages that are likely to confer economic profits well into the future. Name Industry When a stock trades at a suitably wide discount to our estimate, we award it 4 or 5 stars. The wider the discount, the higher the star rating, and vice versa. There were 32 stocks that fit that profile as of Feb. 28, 2011, 10 fewer than made the list on Dec. 31, 2010. Oil prices rose sharply because of political instability in the Middle East and North Africa. Morningstar economist Robert Johnson says oil prices in the $104 range will not kill Market Cap ($Mil) EPS TTM the recovery. He says that fears of a modestly slower-growing economy resulting from higher oil prices may curb the appetite for other commodities such as cotton and copper. However, a spike in oil prices much above $120 would eventually begin to pinch consumers even if other commodities fell off their lofty perches, and that would potentially bring an end to this recovery. P/E Ratio (trailing) Revenue Growth % 3 Yr EPS Dividend Yield ROE % Growth % % Current (trailing) 3 Yr Abbott Laboratories ABT AllianceBernstein Holding L.P. AB Amgen, Inc. AMGN Applied Materials, Inc. AMAT Avon Products AVP Cisco Systems, Inc. CSCO Colgate-Palmolive Company CL Eli Lilly and Company LLY Exelon Corporation EXC General Electric Company GE GlaxoSmithKline PLC ADR GSK International Speedway Corporation A ISCA Johnson & Johnson JNJ Landstar System, Inc. LSTR Lowe's Companies Inc. LOW Martin Marietta Materials MLM Medtronic, Inc. MDT Merck & Co, Inc. MRK Microsoft Corporation MSFT Novartis AG ADR NVS PepsiCo, Inc. PEP Pfizer Inc. PFE Procter & Gamble Company PG Roche Holding AG ADR RHHBY Sanofi-Aventis ADR SNY St. Joe Corporation JOE Sysco Corporation SYY The Western Union Company WU Visa, Inc. V Vulcan Materials Company VMC Wal-Mart Stores, Inc. WMT Zimmer Holdings, Inc. ZMH Data as of February 28, 2011 Drug Manufacturers - Major Asset Management Biotechnology Semiconductor Equipment & Materials Household & Personal Products Communication Equipment Household & Personal Products Drug Manufacturers - Major Utilities - Diversified Diversified Industrials Drug Manufacturers - Major Leisure Drug Manufacturers - Major Integrated Shipping & Logistics Home Improvement Stores Building Materials Medical Devices Drug Manufacturers - Major Software - Infrastructure Drug Manufacturers - Major Packaged Foods Drug Manufacturers - Major Household & Personal Products Drug Manufacturers - Major Drug Manufacturers - Major Real Estate - General Food Distribution Personal Services Credit Services Building Materials Discount Stores Medical Devices 73,510 2,357 48,404 21,509 11,780 102,600 38,344 39,662 27,203 215,024 99,043 1,306 166,027 2,069 35,190 3,924 42,316 100,077 219,806 130,613 100,283 153,029 175,721 129,660 92,334 2,332 16,159 13,906 60,555 5,631 185,473 11,762 2.96 1.58 4.79 0.70 1.39 1.32 4.31 4.58 3.87 1.06 1.54 1.13 4.78 1.77 1.35 2.10 2.90 0.28 2.35 4.26 3.91 1.02 3.59 2.53 — -1.00 1.93 1.36 4.21 -0.75 4.03 2.97 16.26 14.41 10.72 23.47 20.45 14.03 18.21 7.55 10.79 18.18 15.38 24.51 12.85 25.13 19.34 42.37 13.76 12.52 11.33 13.21 16.21 25.13 17.18 13.81 — — 14.39 16.18 17.33 — 12.33 21.01 10.71 92.20 0.63 -0.64 3.01 4.66 4.12 7.39 -0.48 -4.50 6.87 -7.46 0.27 -1.23 0.21 -6.70 8.75 23.87 6.92 10.64 13.58 11.88 1.06 0.54 1.37 -35.87 2.05 1.95 30.97 -8.39 5.43 2.69 8.62 -28.49 19.32 -16.45 4.73 4.37 10.44 19.11 -1.50 -21.24 4.62 -11.68 9.61 -3.83 -15.28 -29.76 5.00 — 13.93 -6.01 4.67 -4.47 10.57 -3.24 10.96 — 7.54 7.01 — — 10.94 -3.06 3.71 5.84 — 1.73 3.25 — 2.73 5.72 5.11 2.47 5.35 0.59 3.56 0.45 1.65 1.86 2.23 4.68 2.22 2.90 20.45 — 19.85 12.82 41.40 17.39 78.37 46.20 19.56 9.60 41.43 4.69 24.88 33.67 10.08 6.95 22.38 20.10 44.34 16.24 2.99 33.27 3.87 7.98 3.07 16.79 3.09 102.95 3.13 — — -10.07 3.64 28.84 1.16 194.38 0.76 12.60 2.29 -1.55 2.32 — 22.60 10.46 76 Morningstar Advisor April/May 2011

Table of Contents for the Digital Edition of Morningstar Advisor - April/May 2011

Morningstar Advisor - April/May 2011
Contents
Contributors
Letter From the Editor
The Debate That Matters Most
What Can the Mutual Fund Industry Do Better?
Cool Logic, Warm Intent
How to Start a Mutual Fund
Owner and Operator
Middle East Revolts Roil Oil Markets
Four Picks for the Present
Investment Briefs
How We Improve Our Odds of Picking Outperformers
Health Care Survived 2010, but Investors Want Proof
The Global Fund-Leadership Playoffs: Europe vs. the United States
U.S. Fund Investors Have It Good
U.S. Fund Firms Learn to Speak UCITS
Balancing Act
The Tamer Ride
Investors Lend a Hand
Healthy, Wealthy, and Wide
Foreign Funds That Win at Concentration
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
VAs Finish 2010 With a Solid Gain
Buying Good Funds, Poorly

Morningstar Advisor - April/May 2011