Undervalued stocks with significant competitive advantages can make attractive long-term holdings. With that in mind, we scoured our 2,000-plus stock coverage universe for high-quality stocks (those boasting wide economic moats) that are trading on the cheap (rated 4 or 5 stars by our analysts).

Our analysts award wide economic moats to companies they believe possess durable competitive advantages that are likely to confer economic profits well into the future. In addition, our analysts estimate the fair value of each stock based on in-depth fundamental analysis. When a stock trades at a suitably wide discount to our estimate, we award it 4 or 5 stars. The wider the discount, the higher the star rating, and vice versa.

New sales of variable annuities declined further in the first quarter of 2009, falling to $30 billion from fourth-quarter new sales of $32.7 billion. Relative to 2008's first quarter, new sales were down 26.7%. A bright spot was the amelioration of sales toward the end of the quarter: The March estimate of industry sales was $10.8 billion, up from the January estimate of $8.75 billion. March sales may have been driven by the combination of annual tax planning, relatively strong equity market performance, and a rush to invest before the closing of living benefit options.