These highly rated stocks have big economic moats and they are outpacing the market this year
The so-called moat has been a popular factor to pick stocks, touted by none other than Warren Buffett, and these names with a wide moat are outperforming the market this year. Buffett has said the "most important" factor to pick a successful investment is judging the durability of a company's competitive advantage, or "moat." "The most important thing [is] trying to find a business with a wide and long-lasting moat around it … protecting a terrific economic castle with an honest lord in charge of the castle," Buffett said during a Berkshire Hathaway annual shareholder meeting in 1995. CNBC Pro used Morningstar to identify wide moat stocks that are beating the market this year. Morningstar defines these stocks as companies whose competitive advantages are strong enough to fend off competition and earn high returns on capital for 20 years or more. We also screened stocks with a market cap bigger than $500 million and rated 4 or 5 stars by Morningstar. On the top of the list were two big tech stocks — Meta and Salesforce . Meta shares jumped earlier this month after the company reported fourth-quarter revenue that topped estimates and announced a $40 billion stock buyback. Salesforce has attracted activist investor interest from Elliott Management and Starboard Value. The cloud-based software company is in the middle of restructuring amid slowing growth and recession fears. Media giant Disney also appeared on the list as a wide moat stock. Earlier this month, Disney reported fiscal first-quarter earnings that beat on the top and bottom line after CEO Bob Iger returned to the company in November. Disney said it will be reorganizing into three divisions: Entertainment, ESPN and parks and experiences. Disney will slash 7,000 jobs from its workforce and plans to cut $5.5 billion in costs, including $3 billion in content savings. Automation company Teradyne and tech name Transunion were also wide moat stocks, according to Morningstar.