2 New Wide-Moat Stocks With Long-Term Potential [Video]

#Morningstar  #HealthcareStocks #StockInvesting

Wide-moat stock investors, take note.

00:00 Introduction

00:52 GE Healthcare Technologies GEHC

01:41 Bio-Rad Laboratories BIO

Susan Dziubinski: I’m Susan Dziubinski with Morningstar. Morningstar’s research team has been adding stocks to its coverage list—which means more stock ideas for investors to consider. Today, we’re looking at two companies that are new to coverage and that earn wide economic moat ratings.

How does Morningstar decide which stocks its analysts will cover? Our coverage tilts toward larger companies that are of most interest to investors. Our analysts also cover a fair representation of names in each industry and include interesting mid- and small-size companies, too. Our analysts perform a discounted cash flow analysis to arrive at what we call a fair value estimate for what a company’s stock is worth. They’ll also dig into a company’s competitive advantages, and those companies in superior business positions will be awarded a wide economic moat rating.

Now, let’s talk about the two new wide-moat companies. The first new wide-moat stock to consider is GE HealthCare Technologies, which was spun off from GE in 2023. GE HealthCare is a leading medical technology firm in imaging and ultrasound equipment. With a firmly established foothold in hospitals and health networks around the world, the company stands to benefit from long-term healthcare trends that include aging populations, the growing demand for early detection of cancer and other diseases, and increasing utilization of minimally invasive and noninvasive procedures. We think the company has carved out a wide economic moat, thanks to intangible assets and switching costs in its imaging and ultrasound segments. We project revenue to grow at low- to midsingle digits over the next 20 years, and we think shares are worth $98.

The second new wide-moat stock to consider is Bio-Rad Laboratories. BioRad is a small company that we think has managed to carve out a wide economic moat in the medical-devices industry. The company is the leader in many of its niche products and solutions for the life sciences research and clinical diagnostic markets. While current market strength doesn’t guarantee future market leadership, the diagnostic and life sciences markets tend to favor strong incumbents, because the complexity of instruments and analysis creates loyal user bases. We forecast revenue growth in the low- to midsingle digits for the next 15 years, and we think BioRad’s stock is worth $430 per share.

For more stocks to consider, be sure to subscribe to Morningstar’s channel and visit Morningstar.com.

Morningstar senior analyst Jay Lee provided the research behind this segment.

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Read what our team is writing.

Susan Dziubinski https://www.morningstar.com/people/susan-dziubinski

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