Morningstar Advisor - Summer 2007 - 72

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). There were 69 stocks that fit that profile as of June 30, 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 Company AXP Amgen, Inc. AMGN Anheuser-Busch Companies, Inc. BUD Avon Products AVP Bank of America Corporation BAC Bank of Montreal BMO Bank of New York Company, Inc. BK Barclays PLC ADR BCS Berkshire Hathaway Inc. A BRK.A Berkshire Hathaway Inc. B BRK.B Boston Scientific, Inc. BSX Brown & Brown, Inc. BRO Cadbury Schweppes PLC ADR CSG Capital One Financial Corporation COF Checkfree Corporation CKFR Chicago Mercantile Exchange Holdings A CME Cintas Corporation CTAS Citigroup, Inc. C Coca-Cola Company KO Corporate Executive Board Company EXBD Dell, Inc. DELL eBay, Inc. EBAY Electronic Arts, Inc. ERTS Enterprise GP Holdings LP EPE Expeditors International of Washington, Inc. EXPD Fastenal Company FAST Federated Investors, Inc. B FII Forward Air Corporation FWRD Diversified International Banks Finance Biotechnology Alcoholic Drinks Household & Personal Products International Banks International Banks International Banks International Banks Insurance (General) Insurance (General) Medical Equipment Insurance (General) Food Mfg. Finance Systems & Security Securities Business Support International Banks Beverage Mfg. Consultants Computer Equipment Online Retail Entertainment/Education Media Natural Gas Utilities Transportation - Misc Distributors Money Management Land Transport 63,335 25,822 74,193 64,001 39,235 16,584 219,892 32,783 33,594 91,992 170,030 168,523 23,112 3,535 28,172 32,807 3,597 18,816 6,321 256,522 122,192 2,403 65,218 43,847 15,181 3,376 8,984 6,387 4,041 1,044 5.74 4.89 3.17 2.60 2.56 1.28 4.68 5.15 3.95 2.79 7325.00 243.92 –2.79 1.28 2.24 6.38 1.37 12.68 2.09 4.20 2.23 2.02 1.42 0.89 0.24 1.16 1.09 1.36 1.91 1.55 15.31 8.98 19.57 21.23 20.08 29.50 10.58 13.55 21.83 10.04 15.04 14.90 –5.62 19.69 26.60 12.38 29.85 42.55 19.05 12.50 23.70 31.85 20.20 36.10 204.08 32.79 38.61 31.06 20.96 22.17 7.93 11.27 11.55 19.52 3.57 8.59 24.42 3.07 6.70 20.28 15.56 15.56 29.12 16.80 4.86 13.83 17.31 27.09 8.20 4.99 4.92 29.89 16.45 40.23 1.49 37.80 20.79 22.06 7.15 13.46 20.67 47.71 9.14 13.64 2.64 –8.64 8.74 14.40 37.25 18.36 10.40 10.40 18.56 15.10 45.63 16.25 — 47.70 10.19 8.01 6.86 27.77 22.20 32.45 –49.56 — 32.08 33.08 2.84 25.19 2.14 3.39 1.20 — 2.29 1.91 4.52 3.45 1.99 4.33 — — — 0.91 2.01 0.14 — 0.55 0.98 3.97 2.46 2.18 — — — 3.58 0.59 0.97 1.91 0.82 42.97 29.14 37.07 15.52 51.95 73.99 16.21 18.41 26.23 20.05 10.28 10.28 –23.44 18.50 34.66 8.48 8.59 27.43 16.51 17.27 30.42 39.77 100.77 11.19 2.04 — 21.97 21.78 38.22 26.88 72 Morningstar Advisor Summer 2007

Morningstar Advisor - Summer 2007

Table of Contents for the Digital Edition of Morningstar Advisor - Summer 2007

Morningstar Advisor - Summer 2007
Contents
Letter from the Publisher
Get to Know the Bond “All-Stars”
Research Briefs
Our Stewardship Test Gets Tougher
Save It for Later
Too Many Oranges
Best of Both Worlds
No Two Clients Are Alike
When It Comes to VAs, It’s Seller Beware
Hands On: Finding the Suitable Fund Share Class for Your Client
Fund Style Can Drift Off Course
Sticking to Their Style, Through Thick and Thin
Marathon Man
Growth, With a Chaser
A Menu of Ideas to Fill Five Market Baskets
Funds: Finding Funds with Conviction
Stocks: So You Say You Want Income?
All Eyes on China
Mutual Fund Analyst Picks
Undervalued Stocks
Most Popular Variable Annuities
What’s New at Morningstar and on the Web
The Advisor’s Economic Moat
Morningstar Advisor - Summer 2007 - Intro
Morningstar Advisor - Summer 2007 - Morningstar Advisor - Summer 2007
Morningstar Advisor - Summer 2007 - Cover2
Morningstar Advisor - Summer 2007 - Contents
Morningstar Advisor - Summer 2007 - 2
Morningstar Advisor - Summer 2007 - 3
Morningstar Advisor - Summer 2007 - 4
Morningstar Advisor - Summer 2007 - Letter from the Publisher
Morningstar Advisor - Summer 2007 - 6
Morningstar Advisor - Summer 2007 - 7
Morningstar Advisor - Summer 2007 - Get to Know the Bond “All-Stars”
Morningstar Advisor - Summer 2007 - 9
Morningstar Advisor - Summer 2007 - Research Briefs
Morningstar Advisor - Summer 2007 - 11
Morningstar Advisor - Summer 2007 - Our Stewardship Test Gets Tougher
Morningstar Advisor - Summer 2007 - 13
Morningstar Advisor - Summer 2007 - Save It for Later
Morningstar Advisor - Summer 2007 - 15
Morningstar Advisor - Summer 2007 - Too Many Oranges
Morningstar Advisor - Summer 2007 - 17
Morningstar Advisor - Summer 2007 - Best of Both Worlds
Morningstar Advisor - Summer 2007 - 19
Morningstar Advisor - Summer 2007 - 20
Morningstar Advisor - Summer 2007 - No Two Clients Are Alike
Morningstar Advisor - Summer 2007 - When It Comes to VAs, It’s Seller Beware
Morningstar Advisor - Summer 2007 - 23
Morningstar Advisor - Summer 2007 - 24
Morningstar Advisor - Summer 2007 - 25
Morningstar Advisor - Summer 2007 - 26
Morningstar Advisor - Summer 2007 - 27
Morningstar Advisor - Summer 2007 - 28
Morningstar Advisor - Summer 2007 - Hands On: Finding the Suitable Fund Share Class for Your Client
Morningstar Advisor - Summer 2007 - 30
Morningstar Advisor - Summer 2007 - 31
Morningstar Advisor - Summer 2007 - 32
Morningstar Advisor - Summer 2007 - 33
Morningstar Advisor - Summer 2007 - Fund Style Can Drift Off Course
Morningstar Advisor - Summer 2007 - 35
Morningstar Advisor - Summer 2007 - 36
Morningstar Advisor - Summer 2007 - Sticking to Their Style, Through Thick and Thin
Morningstar Advisor - Summer 2007 - 38
Morningstar Advisor - Summer 2007 - 39
Morningstar Advisor - Summer 2007 - 40
Morningstar Advisor - Summer 2007 - 41
Morningstar Advisor - Summer 2007 - 42
Morningstar Advisor - Summer 2007 - Marathon Man
Morningstar Advisor - Summer 2007 - 44
Morningstar Advisor - Summer 2007 - 45
Morningstar Advisor - Summer 2007 - 46
Morningstar Advisor - Summer 2007 - 47
Morningstar Advisor - Summer 2007 - Growth, With a Chaser
Morningstar Advisor - Summer 2007 - 49
Morningstar Advisor - Summer 2007 - 50
Morningstar Advisor - Summer 2007 - 51
Morningstar Advisor - Summer 2007 - A Menu of Ideas to Fill Five Market Baskets
Morningstar Advisor - Summer 2007 - 53
Morningstar Advisor - Summer 2007 - 54
Morningstar Advisor - Summer 2007 - 55
Morningstar Advisor - Summer 2007 - 56
Morningstar Advisor - Summer 2007 - 57
Morningstar Advisor - Summer 2007 - Funds: Finding Funds with Conviction
Morningstar Advisor - Summer 2007 - 59
Morningstar Advisor - Summer 2007 - Stocks: So You Say You Want Income?
Morningstar Advisor - Summer 2007 - 61
Morningstar Advisor - Summer 2007 - 62
Morningstar Advisor - Summer 2007 - All Eyes on China
Morningstar Advisor - Summer 2007 - 64
Morningstar Advisor - Summer 2007 - 65
Morningstar Advisor - Summer 2007 - 66
Morningstar Advisor - Summer 2007 - 67
Morningstar Advisor - Summer 2007 - Mutual Fund Analyst Picks
Morningstar Advisor - Summer 2007 - 69
Morningstar Advisor - Summer 2007 - 70
Morningstar Advisor - Summer 2007 - 71
Morningstar Advisor - Summer 2007 - Undervalued Stocks
Morningstar Advisor - Summer 2007 - 73
Morningstar Advisor - Summer 2007 - Most Popular Variable Annuities
Morningstar Advisor - Summer 2007 - 75
Morningstar Advisor - Summer 2007 - What’s New at Morningstar and on the Web
Morningstar Advisor - Summer 2007 - 77
Morningstar Advisor - Summer 2007 - 78
Morningstar Advisor - Summer 2007 - 79
Morningstar Advisor - Summer 2007 - The Advisor’s Economic Moat
Morningstar Advisor - Summer 2007 - Cover3
Morningstar Advisor - Summer 2007 - Cover4
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