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3 Not-So-Fat Pitches to Swing At

Owning no-moat, high-uncertainty stocks requires a different set of expectations than owning higher-quality names.

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Two weeks ago, we shared a list of high-quality stocks trading at a discount. We focused that list on wide-moat stocks with low uncertainty ratings, trading in 4- or 5-star range. In the past, we've referred to such stocks as "fat pitches," or companies with predictable earnings and long-term staying power trading at significant margins of safety. These companies possess long-term structural advantages over their competitors, and they often cluster in profitable industries.

Today's screen focuses on the not-so-fat pitches: companies that do not have that same predictability of earnings nor the same long-term structural advantages as wide-moat companies do. Nevertheless, these companies are trading at deep enough discounts to fair value to compensate for their higher uncertainty, thereby earning 4- or 5-star ratings.

Susan Dziubinski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.