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Stock Strategist

6 Key Concepts to Stock Investing Defined

From moats to fair value to stewardship, we explain the key pillars of our approach to equities.

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Periodically, it’s important to review the basics of our investment philosophy, both for investors who are new to Morningstar and for long-time followers who could use a refresher. We use a particular vocabulary at Morningstar, and in this article we’ll explain what we mean by economic moats, moat trends, stewardship, and so on.

Economic Moats
A company with a very profitable business is like a castle that is constantly under attack by competitors. Without a strong defense, competitors will soon imitate the company’s products, charge lower prices, steal market share, and erode profit margins to the point where the business is merely average, at best.

Matthew Coffina has a position in the following securities mentioned above: KO, UL, JNJ, EPD, TRP, NVO, CMP, GOOG, SCHW, MA, ORCL. Find out about Morningstar’s editorial policies.