Welcome to the homepage of Morningstar.co.uk.
This is the third tutorial video of the series. In the first video, we took you through how
to sign up to Morningstar.co.uk, create your first portfolio and how to add and track investments.
In the second video, we showed you how to get investment ideas by using Morningstar’s
Fund Screener tool. Now let’s take a look at how to use Morningstar’s Equity Quickrank
tool, which can help you dissect the equity market and search for individual companies
we may want to invest in. Let’s say I’m interested in increasing my
exposure to UK healthcare companies. So firstly, I’m going to start my search at the Equities
tab. As with all Morningstar cover pages, tools that can help me find specific investment
ideas are listed in the central column. I’m going to click on Equity Quickrank. As a UK-based
investor, I want to search only for the companies listed on the London Stock Exchange. So I’m
going to leave the exchange dropdown set to ‘London Stock Exchange’, but I specifically
want to look at the healthcare sector. Click Search to run the search.
As you can see from the bottom of the page, this is giving me a long list of 207 stocks,
so I want to narrow this down further. Back at the top, let’s select a specific industry.
I’m interested in looking at major drug manufacturers. When you are ready, click Search again. This
has now reduced my list from 207 stocks to 38, a much more manageable group. I can sort
the list by various criteria simply by clicking on a column’s header. For example, I’m interested
in income, so I want to find those companies with the highest dividend yield. So, I’m going
to go and click on the Dividend Yield column. This will order the results by the highest
dividend yield payers. This quickly tells me that top of the list at present is GlaxoSmithKline.
I want to know more about this company, so I click on the company name.
This takes me to the Morningstar Stock Report for GlaxoSmithKline. I can quickly see specific
information about this investment. I can dig deeper into the data by looking at any of
the number of tabs below the company name. For example, on the New & Events tab, I can
see the latest news on this company, starting with Morningstar’s own commentary and then
moving on to information from the Alliance News newswire and Regulatory News.
I can also look on the Directors & Shareholders tab. This page tells me which major companies
are shareholders and also how much of a holding in this company the top directors have. As
a Morningstar Premium member, this feature extends to show me all of the directors and
how much of a holding in the company they have.
On the Financials & Ratios tab, I can get even more information, in case I’m the kind
of person who likes to do my own number crunching. Finally, to get a market consensus on the
stock, I can see on the Broker Forecast tab that Morningstar has collated brokers’ opinion
on the stock and this tells me that overall the market sees this as a ‘hold’ to ‘weak
buy’ stock. Premium subscribers will again have the ability
to click and view the Broker Forecasts button which gives you even more detail. As a Premium
member I have access to Morningstar’s Research tab which gives me Morningstar’s equity research
and opinion of the stock. Here I can quickly see Morningstar’s take. For example, I can
see that at present the analyst has a Fair Value Estimate for GlaxoSmithKline of 1,510
pence or £15.10. Compared to the current market price this has earned GlaxoSmithKline
a 3-star rating from Morningstar. A 1-star rating would imply that the stock
is overvalued and a 5-star would imply that it’s undervalued compared to how our analyst
values it. As it’s a 3-star stock this implies that the stock is currently fairly valued
compared to our analyst valuation. Within the report I can see the Morningstar analyst’s
long-term view on the stock including the investment thesis, the analysis of the economic
moat or sustainable competitive advantage, valuation, risk factors and management. Together
all this information can help me make my investment decision.
In the next video, we’re going to look at Morningstar’s Premium features in more detail,
including how to use the X-Ray tool to help diversify your portfolio.