The US market looks expensive, so investors may be wondering which stocks to buy now against this backdrop.
Regardless of where the markets are headed, investors may want to own companies that offer some sense of certainty in terms of cash flows and company fundamentals. That’s where Morningstar’s Best Companies to Own list comes in. The companies that make up this list have significant competitive advantages. We believe the best companies have predictable cash flows and are run by management teams that have a history of making smart capital-allocation decisions.
But the best companies aren’t always the best stocks to buy. How much an investor pays to own a company—best or otherwise—is important, too. So, here we’re focusing on the 10 best companies to invest in with the most undervalued stock prices today.
10 Best Global Companies to Invest in Now—February 2025
The 10 most undervalued stocks from our Best Companies to Own list as of Jan. 30, 2025, were:
- Estee Lauder EL
- Anheuser-Busch InBev BUD
- Ambev ABEV
- Huntington Ingalls HII
- Brown-Forman BF.B
- GSK GSK
- Rentokil Initial RTO
- Yum China YUMC
- Campbell CPB
- Constellation Brands STZ
Here’s a little bit about why we like each of these companies at these prices, along with some key Morningstar metrics. All data is as of market close on Jan. 30.
Estee Lauder
- Price/Fair Value: 0.53
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Standard
- Industry: Household and Personal Products
Estee Lauder tops our list of best stocks to buy again this month. 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. There is investor angst over uncertainties around the incoming CEO, says Morningstar analyst Dan Su, but we expect the firm and the Lauder family to navigate the changes and position the firm for long-term growth. However, we see risks on the horizon. Estee Lauder’s premium products are exposed to macro cyclicality as consumers tend to trade down or delay their higher-ticket discretionary spending amid economic headwinds. In addition, the company may need some time to refresh its lackluster cosmetics portfolio. Estee Lauder stock is trading 47% below our fair value estimate of $162 per share.
Anheuser-Busch InBev
- Price/Fair Value: 0.55
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Beverages—Brewers
Anheuser-Busch InBev is a top stock in the beverage industry and the first of four beverage companies to make our list. The brewer has built a vast global scale and regional density through past acquisitions like Grupo Modelo and SABMiller. AB InBev’s strategy is to buy brands with a promising growth platform, expand distribution, and ruthlessly squeeze costs from the business, observes Morningstar analyst Verushka Shetty. “AB InBev has one of the strongest cost advantages in our consumer defensive coverage and is among the most efficient operators,” she adds. The brewer’s free cash flow conversion has been consistently higher than peers’ in recent years, but it needs to continue to deleverage its balance sheet to reduce its earnings volatility. AB InBev stock trades 45% below our fair value estimate of $90 per share.
Ambev
- Price/Fair Value: 0.58
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Beverages—Brewers
Ambev, a subsidiary of Anheuser-Busch InBev, is the largest brewer in Latin America and the Caribbean. It produces, distributes, and sells beer and PepsiCo products in Brazil and other Latin American countries and owns Argentina‘s largest brewer, Quinsa. “We estimate the company faced around BRL 3 billion in higher raw material costs in 2022,” says Morningstar’s Shetty, “and a reversal of that by the end of 2024 would increase the gross margin by 3 percentage points, all else equal.” Shetty also points to premiumization as a long-term growth and margin driver. Ambev stock trades 42% below our fair value estimate of $3.23 per share.
Huntington Ingalls
- Price/Fair Value: 0.60
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Standard
- Industry: Aerospace and Defense
Huntington Ingalls joined our list of best stocks to buy now in December. The company is the largest independent military shipbuilder in the US, spun off of Northrop Grumman NOC in 2011. While defense contractors tend to have relatively slow growth, the nature of the industry allows them to deliver a lot of cash to shareholders. Huntington Ingalls derives practically all of its profits from building ships for the US Navy. Each vessel takes years to manufacture, remains in service for decades, and is typically purchased in blocks to reduce unit costs. Morningstar analyst Nic Owens points out that these long lead times mean that funding for a project is difficult to cut, and block purchases give the builder visibility into long-term revenue. “Huntington Ingalls’ top line is, therefore, less sensitive to changes in the defense budget than peers, making it a defensive play even among defense contractors,” he argues. Huntington Ingalls stock trades at a 40% discount to our fair value estimate of $326 per share.
Brown-Forman
- Price/Fair Value: 0.60
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Beverages—Wineries and Distilleries
Premium-spirits maker Brown-Forman is new to our list of best companies to buy. The company has over 150 years of distilling experience specializing in Tennessee whiskey and Kentucky bourbon. Morningstar’s Su observes that Brown-Forman has earned accolades and loyalty from drinkers for distinct flavors and consistent quality, building strong brand equity for its core Jack Daniel’s trademark in the US and globally. Further, the company’s high-end positioning in the whiskey category aligns well with the industry’s premiumization trend. Still, the company must deal with some tax and regulatory headwinds affecting the industry as well as the proliferation of craft distillers that could chip away at Brown-Forman’s customer base. Shares of Brown-Forman stock are trading 40% below our fair value estimate of $55.
GSK
- Price/Fair Value: 0.61
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Standard
- Industry: Drug Manufacturers—General
GSK is one of the largest pharmaceutical and vaccine companies. The firm’s innovative new product lineup and expansive list of patent-protected drugs create a wide economic moat, says Morningstar senior analyst Jay Lee, as GSK’s diverse drug portfolio insulates the company from problems with any one product. The strong product pipeline at GSK stems from a shift in strategy; the firm had previously targeted slight enhancements but now focuses on true innovation. GSK is also strategically branching out from developed markets into emerging markets. We expect GSK to be a major competitor in respiratory, HIV, and vaccines over the next decade. GSK stock trades 39% below our fair value estimate of $58 per share.
Rentokil Initial
- Price/Fair Value: 0.62
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Specialty Business Services
Rentokil Initial’s strategy is sharply focused on the attainment and maintenance of market share leadership in the highly localized pest-control and hygiene-services markets it competes in. Rentokil Initial has completed over 200 acquisitions since 2015, focusing on acquisition targets that build the geographic density of its customers. The late-2022 acquisition of Terminix Global Holdings was a transformative and moat-reinforcing deal and created a new US market share leader, says Morningstar senior analyst Grant Slade, making it a top stock in the space. The successful execution of the M&A strategy has delivered a durable cost advantage for the pest-control business. With a number of other multinational players also actively acquiring pest-control targets to amass scale, Rentokil Initial’s strategy reinforces its superior cost position. Rentokil Initial stock trades at a 38% discount to our fair value estimate of $40.30 per share.
Yum China
- Price/Fair Value: 0.63
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Standard
- Industry: Restaurants
Yum China’s stock is 37% undervalued relative to our fair value estimate of $76 per share. The restaurant sector in China continues to face challenges because of the real estate downturn and a lack of significant economic stimulus, but Morningstar senior analyst Ivan Su believes Yum China has opportunities for restaurant expansion in China’s fast-food industry. Over the longer term, we believe there are several opportunities for Yum China to gain a share in the fragmented $700 billion Chinese restaurant market. Our conviction in rising fast-food penetration is underpinned by three long-term secular trends: the increasing number of office workers, rising disposable incomes, and shrinking family sizes.
Campbell’s
- Price/Fair Value: 0.63
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Standard
- Industry: Packaged Foods
Campbell’s joins our list of best companies to invest in now. The company earns a wide economic moat rating thanks to its cost advantages and brands, which include its namesake brand, Pace, Prego, and Swanson, among others. We think Campbell’s strategy is sound, observes Morningstar director Erin Lash. By leveraging technology, data insights, and artificial intelligence, the company brings products that consumers value to the shelf in a timely fashion. “We believe Campbell remains committed to extracting inefficiencies from its supply chain and distribution network, optimizing direct-to-store routes, and investing in automation,” she adds. Campbell recently laid out plans to unlock $250 million in savings through fiscal 2028, on top of the $950 million it realized the past few years. Campbell’s stock is trading 37% below our $63 fair value estimate.
Constellation Brands
- Price/Fair Value: 0.63
- Morningstar Uncertainty Rating: Medium
- Morningstar Capital Allocation Rating: Exemplary
- Industry: Beverages—Brewers
Constellation Brands joins our list of the best companies to buy now and rounds out the group. Constellation is the largest provider of alcoholic beverages across the beer, wine, and spirits categories in the United States, generating 82% of revenue from Mexican beer imports under top-selling brands such as Modelo and Corona. While overall beer volume in the US has been stagnant for years, Constellation has capitalized on premiumization tailwinds to drive high-single-digit volume growth in past years. Morningstar’s Dan Su expects the company’s beer volume growth to remain strong in the coming years, backed by consumer loyalty and a solid innovation pipeline. Constellation Brands stock trades at a 37% discount to our fair value estimate of $274 per share.
Find More of the Best Stocks to Invest In
You can review all of the companies on our Best Companies to Own list and dig into our methodology, which includes definitions for the key Morningstar metrics included in this article. Those with specific interests can drill down with our Best International Companies to Own, Best Sustainable Companies to Own, and Best Innovative Companies to Own lists, too. And as we outline here, we suggest that you focus your research on the undervalued stocks of the companies on these lists.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
