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Buy These 5 Top-Ranked Wide Moat Stocks to Strengthen Your Portfolio
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Key Takeaways
Caterpillar's record $72B backlog and data-center demand are supporting growth across construction and power.
Taiwan Semiconductor is expanding advanced capacity as AI and data-center demand outpaces supply.
Teradyne and Zebra are benefiting from AI, automation and rising demand across diverse end markets.
The wide moat strategy involves investing in companies that not only lead their industries but are also strategically fortified to maintain dominance in the future. These companies possess durable competitive advantages that shield them from competitors.
This investment strategy focuses on companies with unique strengths such as brand recognition, patent protection, proprietary technology and network effects. These moats ensure long-term profitability and market leadership, making the companies resilient in volatile markets.
The chart below shows the price performance of our five picks year-to-date.
Image Source: Zacks Investment Research
Caterpillar Inc.
Caterpillar has been benefiting from broad demand across construction, mining and power markets, with rising sales to users and a record backlog. CAT’s order backlog reached a record $72 billion at the end of second-quarter 2026, up 92% year over year.
Caterpillar is gaining from rising artificial intelligence (AI) data-center-related power demand. As big technology companies establish data centers globally to support their generative AI applications, CAT is witnessing robust order levels for reciprocating engines for data centers.
CAT expects full-year 2026 power generation growth in both reciprocating engines and Solar Turbines as cloud computing and generative AI support data-center build-outs. The company continues to add capacity against this multi-year opportunity.
CAT’s long-term plan calls for large reciprocating engine capacity nearly three times the 2024 levels and Power Generation sales more than three times the 2024 levels by 2030. It is also restarting a 10-megawatt gas reciprocating engine platform, adding about 1.5 gigawatts of capacity with shipments expected from fourth-quarter 2026.
Caterpillar has an expected revenue and earnings growth rate of 17.4% and 43.6%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.1% over the last 30 days.
Taiwan Semiconductor Manufacturing Co. Ltd.
Taiwan Semiconductor is experiencing solid demand for its advanced technologies, such as 3-nanometer (nm) and 5nm. The growing adoption of its multi-project wafer processing service, which allows customers to reduce mask costs, is driving its customer momentum.
Demand for advanced manufacturing capacity continues to outpace supply, allowing TSM to benefit from favorable pricing, exceptional capacity utilization, and expanding profit margins. In the last reported quarter, TSM’s high-performance computing revenues accounted for 66% of total revenues and increased 20% sequentially, reflecting sustained demand tied to AI and data-center computing.
Taiwan Semiconductor announced an additional $100 billion investment plan for its Arizona fabrication plants, for a total of $265 billion. This indicates TSM’s confidence that the AI boom will continue and management is not hesitating to expand its capacity. This additional investment will be utilized for 2-nanometer and below production along with advanced packaging.
Taiwan Semiconductor has an expected revenue and earnings growth rate of 36.5% and 55.4%, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.2% over the last 30 days.
UnitedHealth Group Inc.
UnitedHealth has shown steady revenue growth, driven by Optum and UnitedHealthcare. Optum remains a key growth driver through its pharmacy services, technology integration, and government solutions.
UNH’s strong second-quarter 2026 results were aided by growth in commercial fee-based membership and the strength witnessed in Optum Insight. Medical cost management, pricing discipline and benefit design changes also contributed to the upside. However, weakness in Optum Health, Optum Rx and declining risk-based membership partially offset the positives.
A strong market position and ongoing expansion initiatives, combined with rising healthcare demand, support sustained long-term growth. Commercial membership also grew for UNH, supporting margins despite challenges from government programs.
UnitedHealth has an expected revenue and earnings growth rate of -0.2% and 21.2%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.6% over the last 30 days.
Teradyne Inc.
Teradyne is entering a multiyear growth phase as AI investment expands test needs across compute, memory, networking, storage, power and data center systems. Record first-half results and a firmer second-half outlook show demand broadening beyond hyperscaler compute into memory, Product Test and Robotics.
For third-quarter 2026, TER expects revenues in the range of $1.20-$1.30 billion. Rising wafer capacity, transistor growth, and advanced packaging should lift ATE demand, while merchant GPU shipments and a second hyperscaler qualification have been major growth drivers. Omnyx, Photon 100 and MultiLane extend TER’s portfolio from wafers to racks.
Teradyne has an expected revenue and earnings growth rate of 58.3% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 26.4% over the last 60 days.
Zebra Technologies Corp.
Zebra Technologies is benefiting from broad demand across retail, manufacturing and healthcare, with mobile computing, printing, machine vision and RFID supporting growth across both segments.
ZBRA’s integrated hardware, software and services portfolio is deepening customer adoption of automation and AI-enabled workflows, while Elo Touch and Photoneo expand its addressable opportunities.
ZBRA’s healthy cash generation continues to support share repurchases and investment, while device upgrade cycles and growing software adoption strengthen the longer-term outlook. ZBRA’s expanding transportation and logistics pipeline also supports future growth opportunities.
Zebra Technologies has an expected revenue and earnings growth rate of 15.2% and 28.2%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 9.4% over the last 60 days.
View the Zacks #1 Rank List
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Buy These 5 Top-Ranked Wide Moat Stocks to Strengthen Your Portfolio
Key Takeaways
The wide moat strategy involves investing in companies that not only lead their industries but are also strategically fortified to maintain dominance in the future. These companies possess durable competitive advantages that shield them from competitors.
This investment strategy focuses on companies with unique strengths such as brand recognition, patent protection, proprietary technology and network effects. These moats ensure long-term profitability and market leadership, making the companies resilient in volatile markets.
Here we recommend five non-tech Wide Moat stocks with a favorable Zacks Rank. These stocks are: Caterpillar Inc. (CAT - Free Report) , Taiwan Semiconductor Manufacturing Co. Ltd. (TSM - Free Report) , UnitedHealth Group Inc. (UNH - Free Report) , Teradyne Inc. (TER - Free Report) and Zebra Technologies Corp. (ZBRA - Free Report) . Each of our picks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year-to-date.
Image Source: Zacks Investment Research
Caterpillar Inc.
Caterpillar has been benefiting from broad demand across construction, mining and power markets, with rising sales to users and a record backlog. CAT’s order backlog reached a record $72 billion at the end of second-quarter 2026, up 92% year over year.
Caterpillar is gaining from rising artificial intelligence (AI) data-center-related power demand. As big technology companies establish data centers globally to support their generative AI applications, CAT is witnessing robust order levels for reciprocating engines for data centers.
CAT expects full-year 2026 power generation growth in both reciprocating engines and Solar Turbines as cloud computing and generative AI support data-center build-outs. The company continues to add capacity against this multi-year opportunity.
CAT’s long-term plan calls for large reciprocating engine capacity nearly three times the 2024 levels and Power Generation sales more than three times the 2024 levels by 2030. It is also restarting a 10-megawatt gas reciprocating engine platform, adding about 1.5 gigawatts of capacity with shipments expected from fourth-quarter 2026.
Caterpillar has an expected revenue and earnings growth rate of 17.4% and 43.6%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.1% over the last 30 days.
Taiwan Semiconductor Manufacturing Co. Ltd.
Taiwan Semiconductor is experiencing solid demand for its advanced technologies, such as 3-nanometer (nm) and 5nm. The growing adoption of its multi-project wafer processing service, which allows customers to reduce mask costs, is driving its customer momentum.
Demand for advanced manufacturing capacity continues to outpace supply, allowing TSM to benefit from favorable pricing, exceptional capacity utilization, and expanding profit margins. In the last reported quarter, TSM’s high-performance computing revenues accounted for 66% of total revenues and increased 20% sequentially, reflecting sustained demand tied to AI and data-center computing.
Taiwan Semiconductor announced an additional $100 billion investment plan for its Arizona fabrication plants, for a total of $265 billion. This indicates TSM’s confidence that the AI boom will continue and management is not hesitating to expand its capacity. This additional investment will be utilized for 2-nanometer and below production along with advanced packaging.
Taiwan Semiconductor has an expected revenue and earnings growth rate of 36.5% and 55.4%, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.2% over the last 30 days.
UnitedHealth Group Inc.
UnitedHealth has shown steady revenue growth, driven by Optum and UnitedHealthcare. Optum remains a key growth driver through its pharmacy services, technology integration, and government solutions.
UNH’s strong second-quarter 2026 results were aided by growth in commercial fee-based membership and the strength witnessed in Optum Insight. Medical cost management, pricing discipline and benefit design changes also contributed to the upside. However, weakness in Optum Health, Optum Rx and declining risk-based membership partially offset the positives.
A strong market position and ongoing expansion initiatives, combined with rising healthcare demand, support sustained long-term growth. Commercial membership also grew for UNH, supporting margins despite challenges from government programs.
UnitedHealth has an expected revenue and earnings growth rate of -0.2% and 21.2%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.6% over the last 30 days.
Teradyne Inc.
Teradyne is entering a multiyear growth phase as AI investment expands test needs across compute, memory, networking, storage, power and data center systems. Record first-half results and a firmer second-half outlook show demand broadening beyond hyperscaler compute into memory, Product Test and Robotics.
For third-quarter 2026, TER expects revenues in the range of $1.20-$1.30 billion. Rising wafer capacity, transistor growth, and advanced packaging should lift ATE demand, while merchant GPU shipments and a second hyperscaler qualification have been major growth drivers. Omnyx, Photon 100 and MultiLane extend TER’s portfolio from wafers to racks.
Teradyne has an expected revenue and earnings growth rate of 58.3% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 26.4% over the last 60 days.
Zebra Technologies Corp.
Zebra Technologies is benefiting from broad demand across retail, manufacturing and healthcare, with mobile computing, printing, machine vision and RFID supporting growth across both segments.
ZBRA’s integrated hardware, software and services portfolio is deepening customer adoption of automation and AI-enabled workflows, while Elo Touch and Photoneo expand its addressable opportunities.
ZBRA’s healthy cash generation continues to support share repurchases and investment, while device upgrade cycles and growing software adoption strengthen the longer-term outlook. ZBRA’s expanding transportation and logistics pipeline also supports future growth opportunities.
Zebra Technologies has an expected revenue and earnings growth rate of 15.2% and 28.2%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 9.4% over the last 60 days.