3 ASX buy the dip candidates with wide moats

Between AI disruption concerns, interest rate hikes and the ongoing conflict in Iran, it’s been an incredibly turbulent start to 2026 and investors are understandably wary.

Ultimately, Aussie shares haven’t fallen that dramatically but according to our analysts, they haven’t looked this attractive since April 2025.

For years, growth stocks have looked more expensive than value, but that premium has narrowed. In aggregate, small caps are deeply discounted while large caps trade modestly above fair value - the market’s ‘flight to quality’ amid the uncertainty. Of course, turbulent periods signal a reasonable time to look at the better-quality names more closely.

One metric we can use is the Morningstar Moat Rating, which represents a company’s sustainable competitive advantage. Businesses with durable advantages are more likely to compound over longer stretches.

In this article I’ll look at three stocks that are trading under our fair value estimate and also hold a Wide Moat rating. The rating indicates our analysts believe the company holds structural advantages that are likely to last more than 20 years.

WiseTech Global (WTC) ★★★★★

• Fair value estimate: $138
• Share price: $39.96 (as of 15^th April 2026)
• Uncertainty Rating: High
• Price to fair value: 0.29

Down 45% year to date, WiseTech’s ongoing governance concerns and the sector-wide software selloff has created a compelling opportunity. We think these issues and the risk of White leaving are overly discounted in the price. The business is well established with a deep bench of talented people, it has no competitors of note, and it still has a long growth runway.

Most tech players have come under serious pressure as investors re-evaluate software moats in the age of AI. But we believe it will function as a sorting mechanism, rather than a universal eraser of competitive advantages.

Notably, we see a resilient outlook for platforms embedded in complex, regulated workflows, such as WiseTech. We expect that the business will incorporate AI into their product suites and capitalise on its lead over smaller competitors, rather than be displaced by it.

Switching costs in its core product suite, CargoWise are the strongest contributor to WiseTech’s wide moat. CargoWise’s switching costs are most clearly evidenced by its annual gross retention rates, which have stood over 99% per year since 2013, despite WiseTech pushing through notoriously steep price increases over this period.

Another source of its moat is the network effects as the business can continue to expand along another dimension, namely toward the physical layer of the supply chain. Freight forwarders select and coordinate the operators of physical assets, e.g. trucks, ships to move goods. When such third-party logistics companies are integrated with CargoWise, freight forwarders can maintain visibility as goods move along the supply chain without freight forwarders having to manually track and trace these movements. This results in significant labour cost savings for both the freight forwarders and 3PLs.

Given the cost-focused nature of the industry, we believe this incentivises freight forwarders, who operate as gatekeepers in the supply chain, to give selection preference to 3PLs that are integrated with the CargoWise platform. Hence, 3PLs are incentivised to integrate with CargoWise to win business. This in turn increases the pool of potential 3PLs that freight forwarders can work with in a highly efficient manner.

WiseTech’s scale advantage and the decades of development into the comprehensive CargoWise offering make it highly unlikely that a competitor can develop an AI alternative that is financially viable or widely adopted. We expect the company to continue to dominate logistics software for freight forwarders and continue to build new, valuable products for its growing list of blue-chip customers.

Aristocrat Leisure (ALL) ★★★★★

• Fair value estimate: $67
• Share price: $47.68 (as of 15^th April 2026)
• Uncertainty Rating: Medium
• Price to fair value: 0.71

Aristocrat Leisure is an electronic gaming machine manufacturer that sells machines to pubs, clubs, and casinos. The firm is licensed in all Australian states and territories, North American jurisdictions, and essentially every major country. It is one of the top three largest players in the space along with International Game Technology and Light & Wonder.

Down 20% year to date, analyst Angus Hewitt thinks shares have been caught up in the broader selloff in technology stocks. Stringent regulatory licensing requirements in major markets create barriers to entry for new players, and Aristocrat’s extensive portfolio of popular games allows the firm to enjoy economic returns in this environment. But Aristocrat’s fortunes aren’t entirely tied to its customers’ capital expenditure cycles. Leased, rather than purchased, machines represent the majority of gaming segment revenue and attract a fee-per-day arrangement (which can be fixed or performance-based).

The cost to produce content and code has fallen dramatically and is likely to fall much further still. But we think Aristocrat’s core gaming machine business is protected by licenses, regulatory relationships and a dominance in North American leased machines. The company’s top-performing franchises, proprietary math models, and cabinet design are protected intellectual property which underpin its wide economic moat.

We think Aristocrat can take more market share, underpinned by unmatched design and development spending. Gaming operation’s fee per day is market-leading, about 15% higher than Light & Wonder’s.

ASX Ltd (ASX) ★★★★

• Fair value estimate: $70
• Share price: $58.41 (as of 15^th April 2026)
• Uncertainty Rating: Low
• Price to fair value: 0.83

The Australian Stock Exchange reported first-half underlying net profit after tax up 4%, as 11% operating revenue growth was damped by a 20% increase in total expenses. ASX declared a dividend of AUD 0.10 for the period, down 9% on the prior year.

The results were as preliminarily announced in late January. ASX is seeing abnormal cost growth, and we expect this to continue in the near term. It also announced that Managing Director and CEO Helen Lofthouse will step down in May. The stepping down of Lofthouse follows the scathing interim report by the Australian Securities and Investments Commission in December, which asserted that ASX had given undue prioritisation to shareholder returns at the expense of technology investment.

We believe current spending levels are elevated and will normalise when regulatory interest eventually dies down as cost growth has been primarily driven by regulatory costs. Excluding regulatory and inquiry expenses, costs only increased 8%, which was below the increase in revenue.

We view ASX as a natural monopoly, given that it provides essential infrastructure to Australia’s capital markets. Despite a deteriorating regulatory environment, we believe the business is well protected by a wide economic moat driven by network effects and intangibles.

We also believe the energy transition is an underappreciated tailwind. We expect it to spark demand for resources, particularly in Australia, which has strong natural endowments, to deliver new listings and a long tail of revenue from trading and clearing activity.

It is important to note that individual shares should be considered as part of a well-defined investment strategy. For a step-by-step guide to defining your investing strategy, read this article by Mark LaMonica.

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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 about finding different sources of 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.