5 Stocks with an Advantage Over Competitors

Looking for a company which over the long term has the edge over its peers? A competitive advantage can mean sustainable profits for shareholders

Emma Wall 11 January, 2018 | 10:44AM

Looking for a company which has an advantage over its competitors? The Morningstar Economic Moat Rating represents a company’s sustainable competitive advantage. A company with an Economic Moat can fend off competition and earn high returns on capital for many years to come. These can be translated into share price appreciation or dividends for shareholders.

A company whose competitive advantages we expect to last more than 20 years is deemed to have a Wide Moat. There are eight companies in the UK which Morningstar equity analyst currently deem to have a Wide Moat Rating. Analysts are uncertain about the value of one of these stocks – London Stock Exchange (LSE), and think the moat trend of another – AstraZeneca (AZN) – is negative – but five of others are listed below.

British American Tobacco (BATS)

There are two sources to BAT’s wide economic moat: intangible assets and a cost advantage. Both occur in the tobacco business and have not, yet, transferred to the company’s platform of next generation products.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
British American Tobacco PLC2,588.00 GBX-5.32
Diageo PLC2,512.50 GBX-6.39
Imperial Brands PLC1,322.60 GBX-1.61
London Stock Exchange Group PLC6,948.00 GBX-5.16
Reckitt Benckiser Group PLC6,010.00 GBX0.67
Unilever PLC3,931.50 GBX-2.29

About Author

Emma Wall  is former Senior International Editor for Morningstar

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