10 Cheap, High-Quality Stocks With Major Growth Catalysts
Take a look at Morningstar analysts' nine 'exponential technology' themes and some undervalued stocks poised to benefit from them.
It's difficult to predict which technologies will change our world and how long their influence will last. On top of that, it's often a challenge for investors to identify investable opportunities associated with these groundbreaking technologies.
The Morningstar Exponential Technologies Index focuses on finding high-growth companies that are in the early stages of developing technologies that are expected to have a broad impact on society and transform how we live and work. The index, which comprises 200 stocks, differs from other tech-focused indexes in a few important ways. For one, the holdings are not limited to the tech sector. They can come from any sector, as long as they are poised to benefit from one or more of the exponential tech themes listed below.
Another difference is that the index methodology is built on Morningstar's fundamentals-based approach to equity research. With the help of Morningstar's equity research analysts, we currently identify nine exponential technology themes:
Further, there is another index derived from the Exponential Technologies index that uses quality and valuation screens, similar to our Morningstar Wide Moat Focus strategy. If your preferences lean toward high-quality companies trading at reasonable valuations, the Morningstar Exponential Technologies Moat Focus Index might pique your interest. This index uses the 200-stock Exponential Technologies Index as a starting point, but includes only the 50 cheapest wide- and narrow-moat stocks (as measured by price/fair value). You can see the holdings here.
The following table lists the 10 cheapest high-quality stocks in the Exponential Technologies Moat Focus Index currently, along with the main theme or themes they are expected to benefit from.
Disclosure: Morningstar, Inc. licenses indexes to financial institutions as the tracking indexes for investable products, such as exchange-traded funds, sponsored by the financial institution. The license fee for such use is paid by the sponsoring financial institution based mainly on the total assets of the investable product. Please click here for a list of investable products that track or have tracked a Morningstar index. Neither Morningstar, Inc. nor its investment management division markets, sells, or makes any representations regarding the advisability of investing in any investable product that tracks a Morningstar index.
Karen Wallace does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.