Morningstar Advisor - June/July 2011 - (Page 78)

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. 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 Name Industry 28 stocks that fit that profile as of April 30, 2011, four fewer than made the list on Feb. 28, 2011. The official employment report for April was stunningly strong, with private sector employment growing by 268,000 people, the best improvement in more than five years. The purchasing managers’ survey for April remained in strong expansion territory with a reading of 60.4, down only modestly from March’s level of 61.2. The continued strong stats out of the ISM seem to indicate that there’s considerable room for the U.S. economy to grow faster than the measly 1.8% reported in the first quarter. Market Cap ($Mil) EPS TTM With supply issues primarily related to Japanese manufacturers and high gas prices, there was some fear that April auto sales might disappoint. However, consumers came through again as April sales results of 13.2 million units (seasonally adjusted annual rate) were not far off February’s recovery high (excluding one Cash for Clunkers month) of 13.4 million units. And consumers continued to accelerate their spending during April. The headline same-store sales, as reported by the International Council of Shopping Centers, was a stunning 8.5%, compared with their forecast of an already strong 5%-6%. P/E Ratio (trailing) Revenue Growth % 3 Yr EPS Dividend Yield ROE % Growth % % Current (trailing) 3 Yr Abbott Laboratories ABT Applied Materials, Inc. AMAT Avon Products AVP Bank of New York Mellon BK BlackRock, Inc. BLK Cisco Systems, Inc. CSCO Exelon Corporation EXC Franklin Resources BEN General Electric Company GE Google, Inc. GOOG Johnson & Johnson JNJ Lockheed Martin Corporation LMT Lowe's Companies Inc. LOW Medtronic, Inc. MDT Merck & Co, Inc. MRK Microsoft Corporation MSFT Northern Trust Corporation NTRS Novartis AG ADR NVS Pfizer Inc. PFE Procter & Gamble Company PG Roche Holding AG ADR RHHBY St. Joe Corporation JOE Stryker Corporation SYK Sysco Corporation SYY The Western Union Company WU U.S. Bancorp USB Vulcan Materials Company VMC Zimmer Holdings, Inc. ZMH Drug Manufacturers - Major Semiconductor Equipment & Materials Household & Personal Products Asset Management Asset Management Communication Equipment Utilities - Diversified Asset Management Diversified Industrials Internet Content & Information Drug Manufacturers - Major Aerospace & Defense Home Improvement Stores Medical Devices Drug Manufacturers - Major Software - Infrastructure Asset Management Drug Manufacturers - Major Drug Manufacturers - Major Household & Personal Products Drug Manufacturers - Major Real Estate - General Medical Instruments & Supplies Food Distribution Personal Services Banks - Regional - US Building Materials Medical Devices 81,356 19,738 12,351 35,454 36,718 96,629 27,231 27,723 211,308 171,780 177,816 27,718 33,960 45,170 111,762 217,481 11,759 163,529 163,023 183,890 140,908 2,367 23,168 16,695 13,050 48,433 5,340 12,742 2.96 1.01 1.64 2.05 10.55 1.32 3.74 7.73 1.06 26.31 4.78 8.07 1.42 3.01 0.28 2.51 2.74 4.21 1.02 3.72 2.53 -0.39 3.16 1.93 1.38 1.73 -0.75 2.97 17.57 15.50 21.60 13.72 18.59 13.25 11.27 18.35 17.79 20.66 13.76 11.04 18.48 13.89 128.21 10.31 18.25 — 20.58 17.70 13.93 — 18.48 14.97 15.63 14.93 — 21.98 10.71 -0.64 3.01 6.98 21.14 4.66 -0.48 -1.93 -4.50 20.90 0.27 3.04 0.37 8.75 23.87 6.92 1.30 10.64 11.88 1.06 0.54 -35.86 6.85 2.05 1.95 8.98 -8.39 2.69 8.62 -16.45 4.73 -2.03 11.90 4.37 -1.50 -3.44 -21.24 25.56 9.61 3.80 -8.60 5.00 — 13.93 -5.43 -6.01 -4.47 10.57 -3.24 — 9.35 7.54 7.01 -10.71 — -3.06 3.42 1.87 3.10 1.40 2.28 0.34 5.11 0.75 2.51 — 3.32 3.46 1.71 2.13 4.19 2.25 2.30 3.35 3.63 2.99 20.45 18.16 41.40 8.21 8.18 17.39 18.13 20.85 9.60 20.68 24.88 74.67 10.81 22.06 1.51 43.96 10.19 15.98 9.29 16.79 2.77 102.95 — -4.06 1.11 18.50 3.56 28.84 1.26 194.38 1.09 2.42 — 12.80 -2.41 10.46 78 Morningstar Advisor June/July 2011

Table of Contents for the Digital Edition of Morningstar Advisor - June/July 2011

Morningstar Advisor - June/July 2011
Contents
Contributors
Letter From the Editor
Questions for the Secret Society
Are 529 Plans a Useful Tool for Clients’ College-Savings Goals?
Taking the Lead
How to Sell Covered Calls
The College-Savings Challenge
Time to Play Defense?
Four Picks for the Present
Investment Briefs
Careful What You Wish For
Caution in Utilities After Japan Crisis
Blossoms and Thorns in the 529 Garden
Lower Fees, Competitive Returns Help More 529s Make the Grade
Morningstar Grades 529 Plans
529 Risks Include the Political
Researching 529 Plans Made Easy
How Closed-End Funds Are Born
Boutique Within a Bank
The Inefficient Pricing of Moats
More Steak Than Sizzle
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
The Dangers of Demonizing

Morningstar Advisor - June/July 2011