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14 ‘Boring’ Stocks for Not-So-Boring Markets: Morningstar

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Related: 15 New 5-Star Stocks Trading at Big Discounts: Morningstar

These are uncertain times. Inflation has surged. Interest rates are rising. There’s talk of economic slowdown.

High-flying stocks of innovative companies, mainly in the technology and communications sectors, have come tumbling down.

During this period of economic and market uncertainty, investors may want to consider stocks from companies that few would call “innovative,” Susan Dziubinski, director of content at Morningstar.com, wrote in a recent blog post. 

These companies are reliable and are likely to withstand market uncertainty. “Many might even call them boring,” Dziubinski said.

Morningstar analysts identified 14 stocks from among those they cover that are poised to withstand today’s economic climate. These companies have several qualities in common.

They have significant competitive advantages, with wide Morningstar Economic Moat Ratings. This means they will likely fend off their competitors and outearn their costs of capital for the next 20 years. “By their very natures, wide-moat companies are reliable in terms of their businesses,” Dziubinski wrote.

Moreover, these companies are maintaining or growing their competitive advantages. They are not facing insuperable headwinds that could threaten their moat.

The companies have reasonably certain cash flows. According to Dziubinski, Morningstar assigns a low uncertainty score to a company if it enjoys sales predictability, moderate operating and financial leverage, and limited exposure to contingent events.

Because of these factors, analysts can more confidently estimate these companies’ future cash flows, and have high confidence in their fair value estimates of their stocks.

Finally, these companies are run by good managers. Dziubinski noted that analysts eliminated those with poor Morningstar Capital Allocation Ratings in favor of management teams with proven records of being adept capital allocators.

See the gallery for Morningstar’s 14 stocks for rocky markets, ordered here from the one-star stocks to the five-star stocks.