Investors looking for some stocks with high-quality attributes and the potential to wear the “top notch” label would do well to embrace wide moat investing. That’s the first step. Perhaps the second step should be to eschew stock-picking and embrace a basket of wide moat names. The VanEck Morningstar Wide Moat ETF (MOAT) is an exchange traded fund that makes that possible and efficient.
Moreover, MOAT is currently home to some stocks that fulfill the fund’s wide moat objective. And many of those names can be had at appealing valuations. Said another way, investors don’t have to pay a high cost of admission to tap wide moats.
Two important things to note about the fund’s methodology. First, the ETF is not a dedicated value fund. Second, its underlying index is sector agnostic as wide moat investing itself. That said, MOAT currently has a value feel owing to industrial and healthcare stocks combining for more than 45% of the ETF’s roster. That doesn’t diminish the fund’s status as residence to some stocks with stalwart potential.
Some MOAT Holdings Look Interesting
None of the fund’s 55 components exceeds a weight of 3%. That means it could be a variety of stocks in unison that drive upside. One of those names could be cosmetics giant Estee Lauder (EL).
“With brands that include its namesake, Clinique, and Aveda, Estee Lauder is a leading provider of premium beauty products that has a strong presence across both brick-and-mortar and digital channels. We expect the company to benefit from a consumer shift in both developed and emerging markets toward higher-end beauty brands,” noted Morningstar analyst Margaret Giles.
Not to be diminished is the potential potency of MOAT’s healthcare holdings, of which there are plenty. That sector has been a laggard. But it’s also home to a variety of wide moat stocks, including MOAT member firm Pfizer (PFE).
“Further, the company’s large size confers significant competitive advantages in developing new drugs. We expect steady growth until 2028 when patent losses will likely increase, but pipeline advancements hold the potential to mitigate pressures. We think Pfizer stock is worth $42 per share,” added Giles.
On the consumer cyclical side, MOAT holding Nike (NKE) could be ready to shake out of what’s now a lengthy funk.
“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%,” observed Giles.
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