10 High-Quality Foreign-Stock Bargains
For investors looking abroad, these moat-worthy stocks are selling at compelling valuations.
The well-known Morningstar Wide Moat Focus Index targets attractively valued, high-quality stocks. But sometimes "cheap" is relative concept. The strategy targets the most undervalued stocks in its universe based on price/fair value, but that universe--the Morningstar US Market Index--has gained more than 15% per year for the trailing five-year period.
Meanwhile, the Morningstar Global Markets ex-US Index has returned about two thirds of that amount. True, some of the underperformance is due to currency effects. But for bargain-hunters who want to look abroad, the Morningstar Global ex-US Moat Focus Index allows you to harness the moat strategy to find high-quality bargains in developed and emerging markets. Like the Wide Moat Focus, the Global ex-US Moat Focus is pretty straightforward. First, we look at the Morningstar Global Markets ex-US Index, which is a broad index representing 97% of developed (ex-US) and emerging-markets market capitalization. From there, we rank by lowest price/fair value to find the 50 cheapest wide- and narrow-moat stocks (meaning we think they have advantages that will fend off competitors for at least a decade). These 50 stocks represent the most compelling values among the global moat universe, according to Morningstar analysts.
Karen Wallace does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.