Broad moat equities are not always cheap. That’s just the price of admission when it comes to accepting companies with a solid competitive advantage.
However, there are ways for investors to get into the broad moat game with compelling valuations. Enter at VanEck Vectors Morningstar Wide Moat ETF (MOAT). The $ 7.2 billion MOAT tracks the Morningstar Wide Moat Focus Index, which was recently rebalanced. That reconstitution resulted in the addition of 11 stocks and the removal of 11 others.
Asset managers and software providers are among the multi -component industries that have recently joined the underlying MOAT index. Those additions include Adobe (NASDAQ: ADBE) and ServiceNow (NOW).
“Service Today (NOW) not only earns a broad moat rating but also boasts a positive moat trend. We think the company has done an extraordinary job in expanding beyond its software-as-a-service solution for IT service management into the larger IT operations management market, ”Morningstar’s Susan Dziubinski wrote, citing analyst Dan Romanoff.
ServiceNow and Adobe combined for 3.44% of the MOAT roster. The asset managers added to the ETF portfolio are BlackRock (NYSE: BLK) and T. Rowe Price (NASDAQ: TROW). Those stocks combine for 2.61% of the MOAT roster.
“T. Meanwhile, Rowe Price remains the best active asset manager position we cover in the United States, he said. The size and scale of the company’s operations, the strength of its brands, consistent outperformance, and reasonable fees provide an advantage, ”Dziubinski added.
One of the goals of the MOAT index is to deliver a basket of broad moat stocks that trade at attractive values. To that end, some investors may be surprised that some internet retailers have recently joined the MOAT fold, but Etsy (NASDAQ: ETSY) and MercadoLibre (NASDAQ: MELI) did just that.
“MercadoLibre is a one-stop e-commerce solution for Latin American buyers and sellers. Customer expectations for faster shipping times and increased fulfillment entry should all but not replace the company’s services, ”Dziubinski said, citing analyst Sean Dunlop.
Other stocks added to the MOAT index include the Dow component 3M (NYSE: MMM) and Ecolab (NYSE: ECL). Removals include Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B) and tobacco giant Altria (NYSE: MO). All withdrawals reached that status by dropping on the Morningstar price/fair value screen
Among the 10 cheapest stocks in the MOAT index on March 24 were Adobe, Biogen (NASDAQ: BIIB), Compass Minerals (NYSE: CMP), Equifax (NYSE: EFX), Etsy, and Salesforce.com (NYSE: CRM), along with others.
For more news, information, and strategy, visit the Beyond Basic Beta Channel.
The opinions and predictions expressed here are those of Tom Lydon only, and may not actually happen. The information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.