0 Make More Money with Wide Economic Moat StocksLearn how to make more money in stocks with wide economic moat businesses.

Seven types of competitive advantage are analyzed.

Having a competitive edge, allows for a company to have a degree of predictability.

As a stock investor, you are looking for, not only sustainable growth rates, but also consistent growth in cash flow, equity and sales over a 5 to 7-year period of time. With increasing cash flow, profitability for both the business and you the stock investor arises.

Here are seven types of economic moats to look for in a potential business:

A Brand — is a product or service you’re willing to pay more for because you know and trust it. Companies like Disney and Nike have good brand moats.

A Secret – is a patent, copyright or trade secret that makes competition difficult or illegal. Examples of these companies are 3M, Pfizer and Apple.

A Toll – is having exclusive control of a market through government approval or licensing thus being able to charge a “toll” for accessing that product or service. Such businesses as PG & E, a utility company and Time Warner a media business fit the mold.

Switching – is being in the situation where it would be too much trouble to switch to another provider due to the high monetary and time costs. Microsoft and H & R Block are two good examples.

A Low Price – is where products are priced so low no one can compete because they enjoy massive economies of scale due to a huge market share. Both Home Depot and Wal-Mart are examples of businesses that have used pricing to establish an economic advantage.

The Network Effect – is the ability to quickly dominate a network of end-users by being first in the market. EBay was the first online auction business to dominate the North American market.

A Unique Corporate Culture – is a way of doing business that would be difficult to duplicate in another business environment. Southwest Airlines benefited from this type of economic moat in the early years. The seven economic moats discussed are brand, secret, toll, switching costs, low price, the network effect and a unique corporate culture.

I encourage you to get started today in finding those great stocks that have the potential to produce consistently high returns for you.

Join us today by investing in your education at http://stockinvestingsimplified.com.

Disclaimer: Any information shared on Stock Investing Simplified does not constitute financial advice. Stock Investing Simplified is not a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities readers or customers should buy or sell for themselves. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser.

Duration : 0:5:11


Technorati Tags: , , , , , , , , , ,

Tagged with: • • • • • • • • • •

Filed under: Stock Investing

Like this post? Subscribe to my RSS feed and get loads more!