It might not be surprising that one of the biggest supporters of wide moat investing is Warren Buffett. He’s famously said his approach to buying companies and individual stocks is long-term, with holding periods that could be “forever.”
One takeaway is that wide moat investing requires some patience. But the style has the potential to reward that virtue. The VanEck Morningstar Wide Moat ETF (MOAT) is the gold standard regarding ETFs rooted in moat investing. The $14.53 billion ETF, which debuted in April 2012, can be growth/value agnostic. But it currently leans more into value. That explains some of the fund’s recent bullishness.
MOAT’s blue-chip heavy lineup and its value-lean could be attractive attributes at a time when the ETF’s holdings are beaten up while still maintaining robust wide moat credentials. So, MOAT could be the ideal avenue for patient investors seeking positioning for a longer-term blue-chip resurgence.
MOAT Has Blue-Chip Bargains
It’s one thing to identify blue-chip names with the wide moat designation. It’s another to find those attributes with attractive valuations. But that’s part of the mission of MOAT’s underlying index. The ETF is home to an array of attractively valued stocks, including downtrodden Nike (NKE).
“Nike’s consumer plan is led by its Triple Double strategy to double innovation, speed, and direct connections to consumers. The plan includes cutting product creation times in half, increasing membership in Nike’s mobile apps, and improving the selection of key franchises while reducing its styles by 25%. Nike stock trades at a 41% discount to our fair value estimate of $124 per share,” noted Morningstar’s Margaret Giles.
Nike is one of 10 stocks on the research firm’s best blue-chips to buy list. That group is populated by several other MOAT member firms, including pharmaceuticals giant Pfizer (PFE). COVID-19 vaccine ebullience is far in the rearview mirror for Pfizer. But the stock’s 20% decline over the past year arguably belies one of the industry’s most impressive product pipelines.
“Pfizer provided 2024 guidance that acknowledged the firm would be unlikely to hit the previous 6% growth-rate guidance from 2020 to 2025 (excluding covid-19 product sales). Despite the falling outlook, management reiterated support for the dividend, which we believe is secure and will likely support the stock valuation. We think Pfizer stock is worth $42 per share, and it currently trades 29% below that,” added Giles.
Comcast (CMCSA), another MOAT holding, is found on Morningstar’s list of blue-chip dynamos. The research firm says the stock trades at a 28% discount to its fair value estimates.
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