Zacks Podcast Highlights: Wide Moat Investing: The Best Way to Find Great Long Term Stocks?
Eric Dutram
Updated
For Immediate Release
Chicago, IL – In this edition of the Dutram Report, we investigate the world of wide moat companies. These firms have durable competitive advantages which may make them top notch picks for investors over the long haul. To learn more about this concept, we speak with Brandon Rakszawski, a product manager at VanEck, who gives us his insights on the topic. To listen to the podcast, click here: (https://www.zacks.com/stock/news/243925/how-to-find-the-best-stocks-for-long-term-investments )
When you are looking for a great selection for your long term portfolio, you want a stock that is in a great competitive position, and one that looks to see these advantages hold over years, if not decades. But how do you find a company that is going to stand the test of time?
One way to find these companies is by looking at those with ‘wide moats’. This concept seeks companies that have a long term, durable competitive advantage that can protect a firm’s position over the coming years. Think of a castle with a wide moat surrounding it. The wider the moat, the tougher it will be to break into the castle, and that is exactly what this approach is looking for in the corporate world too.
Where Are These Companies?
To find these companies, I spoke with Brandon Rakszawski of VanEck for some insights. Brandon is the product manager at VanEck, an ETF provider that has the VanEck Vectors Morningstar Wide Moat ETF MOAT and the VanEck Vectors Morningstar International Moat ETF MOTI in its lineup, so he is definitely familiar with the concept.
We discuss the idea of wide moats in a bit more detail, and we also talk about the index construction of these products which focus on wide moat ratings from Morningstar, in addition to trading at big discounts to fair value.
We also talk about some of the major types of wide moats out there and how these can help give companies durable competitive advantages over time, and what investors need to look for when analyzing a stock’s prospects.
I also asked Brandon for a few examples of how this in terms of the funds’ holdings, and he noted how Tiffany & Co TIF with its excellent brand name is a great case, as well as Mastercard MA with its incredible network. Additionally, investors should note a few other top-notch examples from the current holdings list, including Amazon AMZN which is well-known for its ultra-low cost model, as well as Grupo Aeroportuario Centro Norte, which is a Mexican company that owns more than a dozen airports, giving it basically a monopoly over air travel in many areas of that country.
We also discuss how this approach might result in some sector biases, and some key factors that investors need to know about this approach. I also talk to Brandon about some of the companies out there that have no moat at all—and thus little to no competitive advantage—and what investors can take away from these companies too.
Bottom Line
This was a great chat on what makes a ‘wide moat’ company, and it could give investors something to look for in terms of 2017 picks too. So, make sure to listen to this edition of the Dutram Report for a closer look at this often-overlooked, but potentially lucrative, segment of the equity world. And for more news and insights into the world of ETFs, make sure to be on the lookout for the next edition of the Dutram Report each and every Thursday, and check out the many other great Zacks podcasts as well!
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