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4 Cheap Stocks Among Recent Economic Moat Changes

We've cut or boosted the economic moat ratings and trends for more than a dozen companies, and these four firms look undervalued.

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Most stock investors will tell you their goal is to buy stocks when they're cheap. But cheap stocks come in a few flavors, and not all of them are appetizing. Take "cigar butt" stocks, for instance: They appear cheap today and could turn a profit in the short term because they often have a few "puffs" left in them. But ultimately, they are low-quality businesses with deteriorating fundamentals. A real investing coup is finding a bargain-basement price on shares of a company that is well-positioned to increase profitability for years, or even decades. 

The reality, though, is that's often easier said than done. High-quality stocks don't go on sale all that often. But sometimes the market sells off indiscriminately, or investors overreact to short-term headwinds facing a company or industry, which can create attractive entry points. It's worth identifying which companies are poised for superior long-term profitability and keeping them on a watchlist so you're in a good position to scoop them up when an opportunity presents itself. 

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