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6 Downgraded Companies to Consider

These wide- and narrow-moat companies have all undergone fair value cuts of 10% or more, yet we think they're attractively priced.

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No, the headline isn't a typo. Just because a company has been downgraded by Morningstar doesn't mean investors should sprint for the exits.

A downgrade in any one of Morningstar's measures--an economic moat rating, a fair value estimate, uncertainty--isn't a sell signal. Rather, a change indicates a recalibration of our long-term expectations. Companies that have experienced downgrades (or upgrades, for that matter) can still be undervalued or overvalued, depending on where the stock is trading relative to our fair value estimate. As a result, investors who read too much into downgrades may be missing out on opportunity.

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