Susan Dziubinski: Hi. I’m Susan Dziubinski, co-host of The Morning Filter podcast. On a recent episode, Morningstar’s chief US market strategist Dave Sekera highlighted a few stocks he liked that were trading at big discounts to our fair value estimates even after they’d rallied recently. Dave’s stock picks included Clorox CLX, Mondelez International MDLZ, and Constellation Brands STZ.
Today, we’re looking at a few more stocks that have outperformed the market recently, yet still look very undervalued relative to Morningstar’s fair value estimates. Morningstar’s analysts think these are attractive stocks to buy at today’s prices.
3 More Stocks to Invest In Before They’re No Longer Bargains
Our first stock pick today is Diageo DEO. Diageo is the largest distiller globally by sales. We think the company has carved out a wide economic moat with its portfolio of brands that include Guinness, Captain Morgan, and Crown Royal. A downturn in alcohol consumption has hurt sales, but we view these headwinds as cyclical rather than structural, and we expect the company’s new CEO to accelerate Diageo’s portfolio repositioning and cost-savings initiatives. Diageo’s stock still looks undervalued, even after performing well so far this year.
Read Morningstar’s full report on Diageo.
Our next stock pick is Yum China YUMC. Yum China is the largest restaurant operator in China. We think the company has carved out a wide economic moat with its portfolio of brands that includes KFC, Taco Bell, and Pizza Hut. The company’s latest results featured accelerating same-store sales and continued margin expansion, and we think Yum China is well-positioned to benefit from the broad recovery in China’s restaurant sector. Yum China’s stock is beating the market this year yet still looks undervalued compared to our USD 76 fair value estimate.
Read Morningstar’s full report on Yum China.
Our final pick is Comcast CMCSA. Perhaps best known for its core cable business, Comcast’s portfolio also includes its media business, featuring NBC, Universal, and theme parks, as well as Sky. However, the company earns a narrow economic moat rating from Morningstar, based largely on the cable business. We expect Comcast to remain a dominant broadband provider in the US. That said, results have been weak, but as this year’s rally in the stock price suggests, the market has expected worse. Even after its runup, we think Comcast stock still looks undervalued relative to our USD 41 fair value estimate.
Read Morningstar’s full report on Comcast.
For more stock ideas, be sure to tune into The Morning Filter each week, wherever you get your podcasts. And visit Morningstar.com, too.
Morningstar director Mike Hodel, senior analyst Ivan Su, and analyst Verushka Shetty provided the research behind this segment.
