Investors want to own companies that offer some sense of certainty in terms of cash flows and fundamentals in uncertain times, Susan Dziubinski, director of content at Morningstar.com, writes in a new blog post.
And uncertain they have been for investors so far this year amid significant market risks, including inflation, rising interest rates and geopolitical risks.
Morningstar has compiled a list of 126 companies that have significant competitive advantages, which its analysts think are stable or growing. “We believe the best companies have predictable cash flows and are run by management teams that have a history of making smart capital allocation decisions,” Dziubinski writes.
She notes, however, that the best firms are not always the best stocks to buy at a given point in time. Also important is how much an investor pays to own a company, whether best or otherwise.
With that in mind, Dziubinski focuses on the 10 best companies with the most undervalued stock prices today.
See the gallery for those 10 stocks, ranked by the degree to which they are undervalued.