1. Align Technology (ALGN)

Morningstar rating: 1 star

Industry: Medical devices and instruments

YTD return: 17.56%

(Photo: Shutterstock)

2. Best Buy (BBY)

Morningstar rating: 2 stars

Industry: Retail – cyclical

YTD return: 22.98%

(Photo: Shutterstock)

3. DexCom (DXCM)

Morningstar rating: 1 star

Industry: Medical diagnosis and research

YTD return: 6.56%

4. Dick’s Sporting Goods (DKS)

Morningstar rating: 2 stars

Industry: Retail – cyclical

YTD return: 21.93%

(Photo: Shutterstock)

5. Dropbox (DBX)

Morningstar rating: 2 stars

Industry: Software

YTD return: 8.88%

(Photo: Shutterstock)

Advertisement

6. Packaging Corp. of America (PKG)

Morningstar rating: 2 stars

Industry: Packaging and containers

YTD return: 3.48%

7. Patterson Companies (PDCO)

Morningstar rating: 1 star

Industry: Medical distribution

YTD return: 23.97%

(Photo: Shutterstock)

8. Target (TGT)

Morningstar rating: 1 star

Industry: Retail – defensive

YTD return: 16.97%

(Photo: Shutterstock)

9. Vivendi SA (VIVHY)

Morningstar rating: 2 stars

Industry: Media – diversified

YTD return: 1.98%

With the economy in difficult straits, but the stock market looking positively perky, Morningstar encourages investors to favor companies that have well-established and stable competitive advantages, Susan Dziubinski, director of content for Morningstar.com, wrote in a blog post this week.

And investors should buy these stocks only when they are selling at a significant discount to their fair values, Dziubinski said.

But many companies lack sustainable competitive advantages. Morningstar has isolated nine stocks that are trading at 1- and 2-star levels without Morningstar Economic Moat Ratings and with negative moat trends.

Dziubinski said there were two reasons for screening on these data points. For one, companies lacking moats are less likely over time to be able to stay ahead of competitors that have moats.

In addition, when Morningstar assigns a company a negative moat trend, it deems the competitive advantages it does have to be eroding, making it more challenging for the company to profitably defend its current market position over time.

See the gallery for the nine richly trading no-moat stocks with negative moat trends that Morningstar says investors should avoid. Year-to-date returns are current as of market close on Sept. 17.

— Related on ThinkAdvisor: