Investors have endured a lot of market uncertainty during 2022. The market faces several risks today, including inflation, rising interest rates, and a possible global recession.

During uncertain times, investors may want to own companies that offer some sense of certainty in terms of cash flows and company fundamentals.

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 firms aren’t always the best stocks to buy at a given point in time. How much an investor pays to own a company—best or otherwise—is important, too.

Today we’re focusing on the 5 best U.S. listed companies with the most undervalued stock prices.

The 5 Best Stocks as of December 2022

The 5 most undervalued stocks from Morningstar's Best Companies to Own list were:

  1. Walt Disney DIS
  2. Comcast CMCSA
  3. Taiwan Semiconductor Manufacturing TSM
  4. Guidewire Software GWRE
  5. Equifax EFX

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 December 6.

Walt Disney

  • Price/Fair Value: 0.58
  • Morningstar Uncertainty Rating: Medium
  • Morningstar Moat Trend Rating: Stable
  • Morningstar Capital Allocation Rating: Standard
  • Industry: Entertainment

Walt Disney made headlines in November, reinstalling Bob Iger as CEO, after posting mixed earnings earlier in the month.

Walt Disney continues to transform its business as the media industry evolves. Direct-to-consumer efforts including Disney+, Hulu, and ESPN+ are taking over as drivers of long-term growth as the firm transitions to a streaming future.

Morningstar senior analyst Neil Macker adds that the company’s collection of Disney-branded businesses demonstrates pricing power that fortify the company’s economic moat.

Disney stock is 42% undervalued relative to our $170 fair value estimate.

Comcast

  • Price/Fair Value: 0.61
  • Morningstar Uncertainty Rating: Medium
  • Morningstar Moat Trend Rating: Stable
  • Morningstar Capital Allocation Rating: Standard
  • Industry: Telecom Services

Comcast is made up of three parts. The core cable business owns networks capable of providing television, internet access, and phone services to roughly 61 million U.S. homes and businesses, or nearly half of the country.

Growth in Comcast’s cable business has slowed, and we expect it to continue to slow as more customers access fiber and wireless network alternatives. However, the falloff in Comcast stock suggests years of steep customer losses, which we don’t think is likely, says Morningstar director Mike Hodel.

While we don’t expect a return to the growth rates of the recent past, we think investors should focus more on the company’s cash flow and capital allocation instead.

Comcast stock trades 40% below our fair value estimate of $60.

Taiwan Semiconductor Manufacturing

  • Price/Fair Value: 0.62
  • Morningstar Uncertainty Rating: Medium
  • Morningstar Moat Trend Rating: Stable
  • Morningstar Capital Allocation Rating: Exemplary
  • Industry: Semiconductors

The stock of the world’s largest dedicated contract chip manufacturer has struggled this year because of macroeconomic uncertainty, sluggish demand, and new U.S. restrictions on doing business with Chinese customers.

The stock has bounced back of late, after Berkshire Hathaway announced it had initiated a substantial stake in the company.

We expect short-term uncertainties over foundry demand to increase, but we think Taiwan Semiconductor is undervalued as an outside beneficiary of cloud services over the long term, says Morningstar analyst Phelix Lee.

Taiwan Semiconductor’s stock trades 39% below our fair value estimate of $133.

Guidewire Software

  • Price/Fair Value: 0.64
  • Morningstar Uncertainty Rating: Medium
  • Morningstar Moat Trend Rating: Positive
  • Morningstar Capital Allocation Rating: Standard
  • Industry: Software—Application

Guidewire Software provides software solutions for property and casualty insurers.

Guidewire has faced some challenges as it transitions to the cloud, notes Morningstar senior analyst Dan Romanoff. That said, we see a significant opportunity for Guidewire to migrate more of its customers to the cloud in coming years, and we see a long runway for additional growth.

Guidewire stock trades 36% below our fair value estimate of $95.

Equifax

  • Price/Fair Value: 0.64
  • Morningstar Uncertainty Rating: Medium
  • Morningstar Moat Trend Rating: Stable
  • Morningstar Capital Allocation Rating: Exemplary
  • Industry: Consulting Services

One of the leading credit bureaus in the United States, Equifax faces strong headwinds today as mortgage market weakness—and a subsequent decline in mortgage credit inquiries—takes a toll.

We nevertheless think the market is being overly harsh: Equifax stock trades 36% below our $315 fair value estimate. In fact, we think Equifax’s Workforce Solutions segment is differentiated and continues to be a large profit driver for the firm, says Morningstar analyst Rajiv Bhatia, and we think the segment’s fundamentals are strong. It is now Equifax’s largest segment.