t rowe price recently launched a new etf called t rowe price capital appreciation equity etf tcaf that’s pretty notable because the manager of the new etf david giroux is considered by many including morningstar to be among the best money managers in the business today plus giroux’s allocation mutual fund t rowe price capital appreciation prwcx has been closed to new investors since 2014 the new etf focuses exclusively on stocks giroux is taking a bottomup approach to investing in us companies favoring those with capable management teams and leading market positions he invests in those whose stocks are trading at attractive relative market valuations and that he expects to provide strong riskadjusted returns over time so today we’re scouring the portfolio of this talented manager’s new etf for investment ideas that look undervalued according to morningstar’s metrics the first undervalued stock in giroux’s portfolio is becton dickinson bdx the world’s largest manufacturer and distributor of medical surgical products earns a narrow economic moat rating from morningstar due to the scale of its basic surgical products segment the company received some good news recently as the food and drug administration cleared the company’s updated pump infusion system which had received recalls during the past several years although the stock rose on that bit of good news it still looks undervalued by morningstar’s measures the second cheap stock that giroux likes is fortive ftv fortive is a technology conglomerate with a broad portfolio of companies that provide missioncritical functions such as gas detection services and radiation exposure measurements its companies serve a wide range of end markets including manufacturing utilities medical and electronics morningstar assigns fortive a narrow economic moat rating because its businesses have large installed bases with high switching costs we also think management has done an exceptional job of allocating capital—in particular driving significant margin expansion in the businesses it acquires the stock looks inexpensive by morningstar’s standards the last stock on the list today is revvity rvty revvity is a name in the diagnostics and research industry that provides instruments tests services and software solutions to the pharmaceutical biomedical chemical environmental and general industrial markets the company has been evolving over the past several years after a series of acquisitions and now operates two main segments diagnostics is one and discovery and analytical solutions is the other we think the company has carved out a narrow economic moat thanks in part to the switching costs associated with both of its segments we think the stock is undervalued for more stock ideas be sure to subscribe to morningstar’s channel and visit morningstarcom morningstar director alex morozov senior analyst julie utterback and analyst krzysztof smalec provided the research behind this segment watch “2 cheap highquality stocks to buy” for more from susan dziubinski