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 variable annuity sales dropped a slight 0.70% in the first quarter of 2010, to $31.2 billion, but they were up 4.63% from the first quarter of 2009's $29.8 billion. While not as strong as previous sales recoveries--VA sales increased by 10.8% in 2003--this time around an explosion of living benefit options did not accompany the rebound in market performance. With living benefits now more expensive and restrictive, on balance, muted future sales growth is expected unless the product is used by more advisors and understood and embraced by more investors.