Growth stocks can be some of the most rewarding investments to own over the long term. There is a catch - the companies with the strongest growth prospects often come with some of the highest price tags.

That can make finding a growth stock that is both high quality and attractively valued difficult. One way to narrow the search is to look for companies with a wide economic moat. These are businesses with durable competitive advantages that Morningstar expects can allow them to earn excess returns on capital for at least the next twenty years. Those advantages can come from factors such as switching costs, intangible assets, network effects, cost advantages or efficient scale.

Ultimately, there are only two prices that matter when you are considering an investment - the price you pay and the price you sell. The secret to a good investment is purchasing great companies at a reasonable price. Even companies with strong competitive advantages can be poor investments if investors pay too much for their future growth. Valuation matters just as much as quality.

The three stocks below combine a wide economic moat with attractive growth prospects and, importantly, currently trade below their Fair Value Estimate (FVE).

Pexa Group Ltd PXA

Pexa Group Ltd. PXA is a leader in digital property technology and innovation in the property industry. It is currently a 4 star stock, and 35% undervalued (at 14 September 2026).

We expect Pexa’s strategic focus in the near term will be on convincing the regulator to allow it to earn a return on a larger capital base than is currently proposed by the Independent Pricing and Regulatory Tribunal of New South Wales. Ipart has suggested Pexa may only earn a return on a capital base of less than AUD 400 million, which we believe is half of what is a reasonable assessment of Pexa’s asset base. Specifically, we believe Ipart unduly discards setup costs related to the technological infrastructure and onboarding of market participants.

As a result of the regulatory intervention, we think Pexa will also be forced to abandon its overseas expansion into the United Kingdom in the near term. We think the company does not have sufficient financial resources and cash flow from the Australian exchange business to continue absorbing the required setup costs there.

We don’t expect the operation of Pexa’s Australian exchange business to require much ongoing strategic focus. Pexa’s Australian exchange business is used for the settlement and lodgment of around 90% of property transactions in Australia, with the balance consisting nearly exclusively of transactions that are still paper-based in some of Australia’s smaller jurisdictions and functional niches. We don’t see competitive threats to this business. We see Pexa’s wide economic moat as well protected by network effects and switching costs. We therefore expect Pexa to gradually increase its market share to close to 100% of transactions.

We award Pexa a Wide Morningstar Economic Moat Rating based on switching costs and network effects in its Australian digital settlement business.

Pexa’s economic moat is primarily supported by network effects. In Australia, property transactions require the involvement of numerous stakeholders, such as buyers and sellers, conveyancing firms, banks, land title offices, state revenue offices, and the Reserve Bank of Australia. In the traditional paper-based model, this entailed error-prone manual processes, inefficient duplicate paperwork, and slow, in-person final settlement. When all stakeholders involved in a transaction can collaborate on a common digital platform, however, transactions can be conducted more securely, more efficiently, and more quickly.

Bulls say

  • Pexa is a natural monopoly in Australia and is well protected by a wide economic moat.
  • Despite heavy investment today, Pexa’s Australian exchange business, like other exchange and financial infrastructure businesses, has the potential for high margins.
  • Following regulatory intervention on pricing, we see no latent risk of new entrants coming in, given they are now unlikely to be able to undercut Pexa’s fees.

Bears say

  • Regulation changes may result in lower prices or limit price increases for Pexa’s Australian exchange business.
  • Pexa’s UK expansion will likely be unsuccessful.
  • Pexa’s expansion into adjacent products and services, including through acquisitions, has not delivered notable benefits and has been discontinued. The company lacks noteworthy growth prospects.

Auckland International Airport Ltd AIA

Auckland International Airport Ltd. AIA is currently a 4 star stock, and is 14% undervalued (at 14 September 2026). As the primary gateway to New Zealand, Auckland Airport should benefit from rising air travel to the island nation. Auckland Airport is the largest airport in New Zealand, and Auckland is by far New Zealand’s most populous city. No other airport in the country is likely to outdo Auckland as an international hub. We expect the airport to capture good medium-term growth from further airline capacity expansion to and from New Zealand. We forecast total passengers handled by Auckland to grow to more than 20% above fiscal 2019 levels over the next decade.

Auckland Airport has carved a wide economic moat, thanks to its near-monopoly position in a stable regulatory environment. We don’t think a second major airport is likely to emerge anytime soon, given Auckland Airport’s expansion potential to accommodate continued growth in passenger numbers, protecting its position for decades to come.

Aeronautical and nonaeronautical operations each contribute about half of revenue, with profitability typically higher in the nonaeronautical business. The aeronautical business is regulated. The regulator allows Auckland Airport to earn a suitable return on its “regulated asset base,” which includes prior capital expenditures and some revaluations. Landing fees and per passenger charges are set with airlines every five years, and independently reviewed to ensure Auckland Airport isn’t abusing its monopolistic power. But this structure presents near-term earnings risk—passenger fees are set up to five years ahead, and lower-than-expected traffic could weigh on returns on invested capital. Nevertheless, capital investments are typically structured with some flexibility should lower traffic eventuate, reducing the risk of extended overcapacity.

The nonaeronautical business is unregulated, but still principally driven by passenger traffic. Retail operations are the biggest part of the nonaeronautical business—notably duty-free, which relies heavily on international passengers, who far outspend domestic travelers. The property business is about half the size of retail, but has grown faster, driven by new developments and rent reviews. Car parking rounds out the bulk of unregulated earnings.

Auckland International Airport enjoys a wide economic moat, underpinned by efficient scale and intangible assets as New Zealand’s primary airport. Its license, and more than 1,500 hectares of land that house the airport and developable landbank around Auckland, are unlikely to be replicated by rivals. We don’t think a second major airport is likely to emerge anytime soon, given Auckland Airport’s expansion potential to accommodate continued growth in passenger numbers and a stable regulatory environment, protecting Auckland’s position for decades to come.

Bulls say

  • Auckland Airport provides exposure to rising incomes in the region, and population growth in New Zealand.
  • Auckland Airport has a wide range of attractive development projects on the horizon, with undeveloped land providing optionality.
  • Auckland Airport should enjoy a meaningful increase in regulated passenger fees, to compensate the firm for its likely sizable capital spending over the next decade.

Bears say

  • A slowdown in the global economy, a deterioration in international relations, or climate challenges could affect tourist inflow to New Zealand, limiting passenger fees and retail spending at the airport.
  • A more onerous regulatory environment could curtail Auckland Airport’s ability to generate economic profit from its aeronautical business.
  • The firm’s bottom line and expansion plans are sensitive to interest rates, which have increased substantially from their all-time lows during the pandemic.

WiseTech Global Ltd WTC

WiseTech WTC is currently a five star stock and is 63% undervalued (at 14 September 2026). WiseTech’s long-term strategy centers on becoming the operating system for global trade and logistics as the industry digitises.

We expect the logistics industry to digitise rapidly over the next decade. The logistics industry currently operates with a relatively low level of digitisation. However, the market for logistics services naturally selects for the lowest-cost providers and we see digitisation as a key driver of cost-savings. We therefore see the process of digitisation as inevitable, either through companies adopting digitisation to remain competitive or through digital leaders taking market share from the digital laggards.

WiseTech provides logistics companies the technology to digitise. WiseTech’s core product suite, CargoWise, provides the best-in-class software solution for international freight-forwarding by air and ocean, and customs and compliance. We see logistics companies that use the CargoWise international freight-forwarding solution significantly outperforming their peers due to the efficiency and productivity improvements the platform provides. We therefore expect this solution to become the industry default, either through increased customer adoption or through WiseTech’s customers taking market share.

We expect WiseTech to leverage its already dominant position in international freight-forwarding to move into downstream adjacencies, which consist of, in order of functional proximity, road and rail and warehousing. Additionally, with the acquisition of e2open, we also expect WiseTech to move into upstream adjacencies, as it starts servicing beneficial cargo owners with their logistics procurement processes.

We award WiseTech a wide moat based on switching costs and network effects in its core CargoWise product suite.

Bulls say

  • CargoWise’s international freight-forwarding solution is best-in-class and we expect this solution to become the industry-default.
  • WiseTech is well placed to leverage CargoWise’s market position in international freight-forwarding into adjacent services such as customs and compliance, rail and road, and warehousing.
  • The logistics industry currently operates with a relatively low level of digitisation, but we see the process of digitisation as largely inevitable.

Bears say

  • The logistics industry is still in the early stages of digitising, meaning there is high uncertainty as to how large the market opportunity will be for WiseTech’s current and future products.
  • Following the resignation of founder White from the CEO role and his transition to the board, it is unclear whether the company will have the same level of executive leadership.
  • WiseTech’s hasn’t yet incorporated all of its acquisitions into the CargoWise product suite or e2open, and the return on those investments could be dilutive if they lack strategic attention.

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Terms used in this article

Star Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.

Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.

Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn more about how to identify companies with an economic moat, read this article by Mark LaMonica.

Uncertainty Rating: Morningstar’s Uncertainty Rating is designed to capture the range of potential outcomes for a company. An investor can think of this as the underlying risk of the business. For higher risk businesses with wider ranges of potential outcomes an investor should consider a larger margin of safety or difference between the estimate of what a share is worth and how much an investor pays. This rating is used to assign the margin of safety required before investing, which in turn explicitly drives our stock star rating system. The Uncertainty Rating is aimed at identifying the confidence we should have in assigning a fair value estimate for a stock. Read more about business risk and margin of safety here.