Retaining its place in Morningstar's best stock ideas for the month of April, global hospital group Ramsay Health Care (ASX: RHC) is regarded as holding a narrow moat of competitive advantage.

"The scale of Ramsay’s operations in the Australian context underpins, in our opinion, a sustainable competitive advantage that drives both cost advantage and a reasonable level of pricing power in negotiations with private health insurers," says Morningstar equity analyst, Chris Kallos.

"We believe government policies designed to support private health insurance membership, combined with current inefficiencies of the public hospital system, protect private hospitals from major funding related disruptions."

Kallos believes the company's move into community pharmacy is "complementary to acute treatment settings and extends the company’s reach into chronic disease management; this is a growing area, given the ageing demographic".

Ramsay's latest closing price of $63.12 is more than 20 per cent below his FVE.

Also holding its position in the latest Best Stock Ideas list, Bapcor (ASX: BAP) is a narrow-moat automotive spare parts distributor, currently trading almost 20 per cent below Morningstar's fair value estimate.

At this share price, Morningstar analyst Daniel Ragonese believes there is "an opportunity to invest in a company with a strong growth trajectory, resilience to economic cyclicality, and a dominant competitive position in its core markets".

He points to the company's resilience to economic downturns, with customers more likely to repair vehicles rather than replace them in more difficult financial times.

Its economic moat is underpinned by the strong customer reach--with more than 30,000 auto workshop clients, a product range that exceeds 500,000 items, and 30 per cent market share.

"Bapcor is well positioned to continue executing its organic network expansion, stealing share from the smaller players and fortifying its competitive position," Ragonese says.

Within the financial space, Morningstar senior equity analyst David Ellis describes Macquarie Group (ASX: MQG) as "an attractive growth stock, internationally focused and characterised by high quality management".

Ongoing growth in global infrastructure and energy sectors are the primary drivers of Morningstar's above-consensus earnings forecasts--underpinned by expected average earnings-per share growth of 9 per cent.

"Macquarie's earnings upgrade cycle continues, providing attractive upside for investors. The investment case for Macquarie is based on strong future earnings growth, high return on equity, and an attractive dividend stream based on an investor friendly 70 per cent payout," Ellis says.

Invocare (ASX: IVC) and Australian Pharmaceutical Industries (ASX: API) round out this list. Holding a wide moat, Invocare is a funeral services business with a 35 per cent market share in Australia.

The resilience of demand for Invocare services is a key attraction for Morningstar, with the national death rate of 2 per cent marginally above the long-term average, and tipped to reach 3 per cent, over the next 15-plus years, according to Australian Bureau of Statistics projections.

"Given Invocare’s wide economic moat, and dominant market position, we believe the company is best placed to capitalise on this tailwind," Ragonese says.

With a recent closing price of $12.70 a share, Invocare is priced considerably below Morningstar's FVE of $16.50.

A leading pharmaceutical wholesaler, Australian Pharmaceutical Industries is the third-largest nationally, with around 26 per cent market share.

Morningstar's Chris Kallos says the company is "unique in the Australian context, given the degree of vertical integration and targeting of the mass-market health and beauty segment".

He notes Morningstar's view that pharmaceutical distribution and wholesaling is a relatively mature industry, but is encouraged by the company's expansion into the health and beauty segment. "This is generating scale benefits and forging an attractive franchise model for community pharmacies seeking a stronger retail-facing business," Kallos says.

With a FVE of $2 per share, the company's last closing price at publication was $1.54.

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Glenn Freeman is a senior editor at Morningstar.

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