{"id":4166,"date":"2022-03-30T09:05:10","date_gmt":"2022-03-30T09:05:10","guid":{"rendered":"https:\/\/rakshithpai.com\/?p=4166"},"modified":"2023-12-22T14:23:12","modified_gmt":"2023-12-22T14:23:12","slug":"find-and-invest-stocks-with-moat","status":"publish","type":"post","link":"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/","title":{"rendered":"Find &#038; Invest in Companies With Strong MOAT!"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6631160592618\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\" style='display:none' id=\"ez-toc-cssicon-toggle-item-6631160592618\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#What_is_a_MOAT\" title=\"What is a MOAT?\">What is a MOAT?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#MOAT_and_its_relevance_to_Investing\" title=\"MOAT and its relevance to Investing:\">MOAT and its relevance to Investing:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Types_of_MOAT_in_a_Company\" title=\"Types of MOAT in a Company:\">Types of MOAT in a Company:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Markets_Share_Advantage\" title=\"Markets Share Advantage\">Markets Share Advantage<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Cost_Advantage\" title=\"Cost Advantage\">Cost Advantage<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Goodwill_or_Brand_Value\" title=\"Goodwill or Brand Value\">Goodwill or Brand Value<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Corporate_Leadership\" title=\"Corporate Leadership\">Corporate Leadership<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Cost_Sharing\" title=\"Cost Sharing\">Cost Sharing<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#How_to_Find_%E2%80%9CMOATs%E2%80%9D_in_a_Company\" title=\"How to Find \u201cMOATs\u201d in a Company?\">How to Find \u201cMOATs\u201d in a Company?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Cash_Position\" title=\"Cash Position\">Cash Position<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Operating_Performance\" title=\"Operating Performance\">Operating Performance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Not_affected_by_Economic_Adversaries\" title=\"Not affected by Economic Adversaries\">Not affected by Economic Adversaries<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Market_Dominance\" title=\"Market Dominance\">Market Dominance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Research_and_Developments\" title=\"Research and Developments\">Research and Developments<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#How_to_Find_the_Competitive_Advantage\" title=\"How to Find the Competitive Advantage?\">How to Find the Competitive Advantage?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Industry_Analysis\" title=\"Industry Analysis\">Industry Analysis<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Stock_Research\" title=\"Stock Research\">Stock Research<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Financial_Statements\" title=\"Financial Statements&nbsp;\">Financial Statements&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Business_Model\" title=\"Business Model\">Business Model<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Ratio_Analysis\" title=\"Ratio Analysis\">Ratio Analysis<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#FAQs\" title=\"FAQs:\">FAQs:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/#Also_read\" title=\"Also read:\">Also read:<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_MOAT\"><\/span><strong>What is a MOAT?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When we say \u201cMOAT\u201d, It means, \u201cEconomic Moat\u201d. The phrase &#8220;economic moat,&#8221; coined by <a href=\"https:\/\/rakshithpai.com\/best-warren-buffett-quotes\/\">Warren Buffett<\/a>, refers to a business&#8217;s ability to retain a competitive edge over its competitors in order to safeguard its long-term earnings and market share from competitors.&nbsp;<\/p>\n\n\n\n<p><strong>As with a medieval castle, the moat helps to keep the fortress&#8217;s inhabitants and their treasures safe from intruders.<\/strong><\/p>\n\n\n\n<p>Companies with Strong MOAT turn out to be Market leaders in their Industry. We can also find such companies in &#8220;Coffee Can Investing&#8221;. <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/rakshithpai.com\/coffee-can-investing-top-15-companies\/\" target=\"_blank\" rel=\"noreferrer noopener\">CLICK HERE!<\/a><\/span><\/strong> to know more about <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/youtu.be\/zqY18Jqg8z0\" target=\"_blank\" rel=\"noreferrer noopener\">Coffee Can Investing<\/a><\/span><\/strong>. <\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-1 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background wp-element-button\" href=\"https:\/\/upstox.com\/open-account\/?f=FN1853\" style=\"border-radius:50px;color:#0f0027;background-color:#e4fa00\" rel=\"nofollow\"><strong>Open Upstox Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"MOAT_and_its_relevance_to_Investing\"><\/span><strong>MOAT and its relevance to Investing:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A competitive advantage is essentially any feature that enables a business to deliver an item or service comparable to those supplied by rivals while outperforming those competitors in terms of profit.&nbsp;<\/p>\n\n\n\n<p>A cost advantage, such as low-cost access to raw resources, is an excellent illustration of competitive advantage. <strong><a href=\"https:\/\/rakshithpai.com\/best-warren-buffett-quotes\/\">Buffett<\/a> and other great investors have mastered the art of identifying firms with strong economic moats but relatively low share prices.<\/strong><\/p>\n\n\n\n<p>However, one of the fundamental assumptions of contemporary economics is that, over time, competition will destroy whatever competitive advantages a corporation may have.&nbsp;<\/p>\n\n\n\n<p><strong>This impact happens because once a business achieves competitive advantages, its superior operations yield increased profits for the firm, creating a strong incentive for rival firms to copy the leading firm&#8217;s procedures or develop even better-operating methods.<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_MOAT_in_a_Company\"><\/span><strong>Types of MOAT in a Company:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are various methods for a business to develop an economic moat that gives it a strong competitive advantage. Below, we&#8217;ll look at several different types of MOATs.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Markets_Share_Advantage\"><\/span><strong>Markets Share Advantage<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Being large might occasionally serve as an economic moat for a business.<\/strong> A corporation gains economies of scale once it reaches a specific size. This occurs when a greater number of units of an item or service can be produced at a lower cost of input.&nbsp;<\/p>\n\n\n\n<p>This results in cost savings in areas such as financing, advertising, and production. Large corporations competing in a particular industry often dominate the industry&#8217;s main market share, forcing smaller players to either exit the industry or hold smaller &#8220;niche&#8221; positions.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Cost_Advantage\"><\/span><strong>Cost Advantage<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As seen by the lemonade stand, <strong>a cost advantage that competitors cannot reproduce may be an extremely successful economic moat.&nbsp;<\/strong><\/p>\n\n\n\n<p>Businesses with strong cost advantages can undercut any rival attempting to enter their field, either driving the opponent out or limiting its growth. Businesses with long-term cost advantages can retain a substantial market share in their sector by pushing out any new competitors.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Goodwill_or_Brand_Value\"><\/span><strong>Goodwill or Brand Value<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Another sort of economic moat is generated by a firm&#8217;s intangible assets, which include patents, brand awareness, and government licensing.&nbsp;<\/strong><\/p>\n\n\n\n<p>Due to their strong brand awareness, these sorts of businesses may charge a premium for their products over those of rivals, hence increasing revenues.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Corporate_Leadership\"><\/span><strong>Corporate Leadership<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Certain reasons why a business could have an economic moat are more difficult to pinpoint. Soft moats, for example, can be established by great management or distinctive business culture.&nbsp;<\/p>\n\n\n\n<p>While difficult to explain, <strong>a corporation&#8217;s sustained economic success may be largely attributed to its distinctive leadership and corporate climate.<\/strong><\/p>\n\n\n\n<p>Economic moats are notoriously difficult to spot during their construction. Their consequences become considerably more apparent in retrospect once a corporation has achieved extraordinary heights.<\/p>\n\n\n\n<p>From an investor&#8217;s perspective, it makes sense to invest in expanding firms at the point when they begin to realize the benefits of a broad and enduring economic moat. In this scenario, the most critical component is the moat&#8217;s duration. The longer a business can reap profits, the more benefits accrue to itself and its stockholders.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Cost_Sharing\"><\/span><strong>Cost Sharing<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Being the largest fish in the pond offers additional benefits. When a corporation achieves industry dominance, suppliers and consumers may face significant switching costs if they choose to do business with a new rival.&nbsp;<\/p>\n\n\n\n<p><strong>Due to these high switching costs, competitors have a tough time capturing market share from the industry leader.<\/strong><\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-2 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background wp-element-button\" href=\"https:\/\/upstox.com\/open-account\/?f=FN1853\" style=\"border-radius:50px;color:#0f0027;background-color:#e4fa00\" rel=\"nofollow\"><strong>Open Upstox Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/03\/wykbsv5-pa-e1648630448295-edited.jpg\" alt=\"Companies with strong MOATs that are worth Investing in India\" class=\"wp-image-4171\" style=\"width:1180px;height:806px\"\/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Find_%E2%80%9CMOATs%E2%80%9D_in_a_Company\"><\/span><strong>How to Find \u201cMOATs\u201d in a Company?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Certain corporations, such as Reliance Industries and Tata Consultancy Services, plainly benefit from large moats. However, moats are not always visible. This is also true for businesses you may not be familiar with.<\/p>\n\n\n\n<p>Examining historical stock performance and financial statements might be beneficial if you&#8217;re looking for stocks with large moats. While you&#8217;re examining the company more closely, keep an eye out for specific indicators that indicate a firm&#8217;s strength.<\/p>\n\n\n\n<p><strong>In order to Find a Company with Investable MOAT, check for the following aspects:<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Cash_Position\"><\/span><strong>Cash Position<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Ever heard the term \u201cCash is King?\u201d Well, it is! Especially interim of companies that are flushed with cash. These are the companies that turn out to become market leaders in their business.&nbsp;<\/p>\n\n\n\n<p><strong>They can not only invest in better Research and Development and other required expenses. They also have the ability to buy off their competitors.&nbsp;<\/strong><\/p>\n\n\n\n<p>Numerous businesses choose to hoard cash. Instead of reinvesting the available cash or to it off as dividends. Some may argue that the company&#8217;s cash should be spent or returned to investors.&nbsp;<\/p>\n\n\n\n<p>However, keep in mind that maintaining a sizable cash reserve will give a robust buffer if revenues fall short of projections.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Operating_Performance\"><\/span><strong>Operating Performance<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Companies with MOAT are better at their operating performance. <strong>So, any company with better than industry average operating performance could possess such a MOAT that\u2019s helping the company to achieve the said performance figures.<\/strong><\/p>\n\n\n\n<p>To begin with, identify the company&#8217;s primary rivals. Then, compare their sales and profit margins to those of the firm you&#8217;re researching. If there is a significant difference between the company&#8217;s earnings and those of competitors, you can assume that the more lucrative firm has a broad moat.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Not_affected_by_Economic_Adversaries\"><\/span><strong>Not affected by Economic Adversaries<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Any company that could wave off economic uncertainties is by default equipped with MOAT.<\/strong><\/p>\n\n\n\n<p>Examine whether the firm continues to do so successfully despite the general state of the economy. This may indicate that there is something in its business model that enables it to survive in difficult times.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-3 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background wp-element-button\" href=\"https:\/\/upstox.com\/open-account\/?f=FN1853\" style=\"border-radius:50px;color:#0f0027;background-color:#e4fa00\" rel=\"nofollow\"><strong>Open Upstox Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Market_Dominance\"><\/span><strong>Market Dominance<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Pidilite Industries \u201cFevicol\u201d is reported to have a large moat around it. This is because Pidilites Fevicol sales vastly exceed those of any other Adhesive manufacturer. <strong>Due to the widespread usage of its brand by the majority of users. So much so that the brand itself has become the default name for the product<\/strong>.<\/p>\n\n\n\n<p>Another such name is Nestle \u2018Maggie\u2019, You think of noodles, your mind immediately goes towards Nestle Maggie.<\/p>\n\n\n\n<p>The success of these items provides their creators with a large moat, insulating them from the competition. They may even safeguard the business against the failure of its other items.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Research_and_Developments\"><\/span><strong>Research and Developments<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Any company that doesn\u2019t spend on R&amp;D is destined to fail!<\/strong><\/p>\n\n\n\n<p>Companies die off from inefficiencies over time. Companies lose market share as they lose touch with the market and do not evolve as per the market needs.<\/p>\n\n\n\n<p>In such a situation, <strong>one company will hold a unique patent on a product or technique that other businesses are compelled to adopt. <\/strong>This advantage has the potential to be a significant revenue generator that competitors will be unable to replicate.<\/p>\n\n\n\n<p>Is business almost regards to the industry? Do consumers utilize a company&#8217;s product or service just because it is well-known and has been operating for a lengthy period of time? Oftentimes, merely having a lengthy, dependable presence in the industry may provide a significant benefit to a business.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Find_the_Competitive_Advantage\"><\/span><strong>How to Find the Competitive Advantage?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Retail investors make investment selections based on expert recommendations, word of mouth, and media attention. The more money you invest, the more critical it is to perform your own fundamental studies on companies prior to investing.&nbsp;<\/p>\n\n\n\n<p><strong>To invest confidently and responsibly, you must do a thorough stock analysis and have a complete grasp of the industry in which you intend to invest.<\/strong><\/p>\n\n\n\n<p>All businesses compete for the business of their clients, and a successful firm will always have an advantage over its competitors. This is the firm&#8217;s &#8220;secret sauce,&#8221; or the reason customers prefer one company over another.<\/p>\n\n\n\n<p>What to look for: Amazon is an excellent example of a business that has a substantial &#8220;economic moat.&#8221; With free two-day delivery, Amazon transformed the retail sector, leading competitors to swiftly lose business due to their inability to match Amazon&#8217;s pricing or shipping guarantee.<\/p>\n\n\n\n<p><strong>A firm that has a competitive advantage is a positive indicator that you&#8217;ve discovered an excellent stock to invest in.<\/strong><\/p>\n\n\n\n<p><strong>Check for the following points:<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Industry_Analysis\"><\/span><strong>Industry Analysis<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A comparison of the company&#8217;s performance to that of its rivals or other firms in the same industry sheds further light on the company&#8217;s performance in comparison to industry norms.&nbsp;<\/p>\n\n\n\n<p><strong>Annual reports published by the firm, industry reports by stock analysts, trade journals, surveys, and research papers all contribute to the formation of a clear image of industry trends.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Stock_Research\"><\/span><strong>Stock Research<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>To determine if a stock is worth the price it is trading at, one must examine the company&#8217;s valuation. While stock prices should be impacted by the company&#8217;s earnings, additional events such as a worldwide health crisis, foreign investment, or regulatory changes can disproportionately increase or deflate the value of a stock.&nbsp;<\/p>\n\n\n\n<p><strong>Ratio Analysis of a stock is also an excellent predictor of whether the stock&#8217;s price is excessive in comparison to its earnings per share. Analysts also examine historical data, including earnings per share over time.&nbsp;<\/strong><\/p>\n\n\n\n<p>A high P\/E ratio may suggest an expensive business, whilst a low one indicates an undervalued stock. It is one of the indicators used to decide if a stock is worth purchasing or not. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Financial_Statements\"><\/span><strong>Financial Statements&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Stock market research is fundamentally a numbers game.<\/strong> If you already know the firm you want to invest in, a good place to start is with the company&#8217;s financial statements. These remarks are available to the public.&nbsp;<\/p>\n\n\n\n<p>A cursory examination of the company&#8217;s balance sheet, income statement, and cash flow statement provides an objective summary of the company&#8217;s performance. Financial statements include information on sales, profit margins, and future profitability potential, allowing you to assess the company&#8217;s future earning potential.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-4 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background wp-element-button\" href=\"https:\/\/upstox.com\/open-account\/?f=FN1853\" style=\"border-radius:50px;color:#0f0027;background-color:#e4fa00\" rel=\"nofollow\"><strong>Open Upstox Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Business_Model\"><\/span><strong>Business Model<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The method through which a firm earns money is referred to as its &#8220;business model.&#8221; While there is no one-size-fits-all approach to company management, successful businesses should position themselves to maximize revenues.<\/p>\n\n\n\n<p>What to look for: <strong>When investigating a firm&#8217;s business strategy, educate yourself on the company&#8217;s goods and services, target market, and industry in which it competes.<\/strong><\/p>\n\n\n\n<p>Certain businesses (such as Amazon) are attempting to reach a broader audience through lower prices and higher volume sales. Other corporations (such as Apple) produce unique products for which people are willing to pay a premium. Numerous company models can be effective, but before investing, ensure that you understand \u2013 and agree with \u2013 how the firm is operated.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Ratio_Analysis\"><\/span><strong>Ratio Analysis<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>A financial ratio, or accounting ratio, is the ratio of two numerical values extracted from an enterprise&#8217;s financial statements.&nbsp;<\/strong><\/p>\n\n\n\n<p>Numerous standard ratios are frequently used in accounting to attempt to analyze a corporation&#8217;s or other organization&#8217;s overall financial situation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For the ordinary investor, <strong>the ideal investment is one that has a history of consistent growth. <\/strong>Additionally, it should be able to weather market downturns and difficult times. <strong>If you are investing for the long run, you should look for businesses that are resilient at times of stiff competition and changing market conditions.<\/strong><\/p>\n\n\n\n<p>So, which prominent stocks are known to have a broad moat? Pidilite Industries may be one of them. The corporation dominates the adhesive market, with some estimating that the company will account for over 70% of the market share in the industry.<\/p>\n\n\n\n<p>Additionally, Pidilite&#8217;s built-in efficiency, warehouses, and supply chain systems make it extremely difficult for both online and brick-and-mortar retailers to compete.<\/p>\n\n\n\n<p>CAMS (Mutual Fund), Praj Industries (Ethanol), Asian Paints (Decorative Paint), IRCTC (Indian Railway), etc. are some of the companies that are frequently lauded for their expansive moats. These are the world&#8217;s largest brick-and-mortar stores, with a considerable online presence. Additionally, they have a significant advantage in that they are able to provide a broad range of items at prices that are lower than their competitors.<\/p>\n\n\n\n<p><strong>Additionally, they are a bargain shop, which enables them to generate high sales both during prosperous economic times and when consumers have less money in their purses.<\/strong><\/p>\n\n\n\n<p>Examining historical stock performance and financial statements might be beneficial if you&#8217;re looking for stocks with large moats. While you&#8217;re examining the company more closely, keep an eye out for specific indicators that indicate a firm&#8217;s strength.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span><strong>FAQs:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-uagb-faq uagb-faq__outer-wrap uagb-block-973368b9 uagb-faq-icon-row uagb-faq-layout-accordion uagb-faq-expand-first-false uagb-faq-inactive-other-true uagb-faq__wrap uagb-buttons-layout-wrap uagb-faq-equal-height\" data-faqtoggle=\"true\" role=\"tablist\">\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-5be0d2e8\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>What is a MOAT?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">The term &#8220;moat&#8221; refers to a company&#8217;s capacity to sustain the competitive advantages that are expected to aid it in fending off competition and sustaining profitability in the future.<\/p><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-810956cf\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>How to tell if a Campany has MOAT?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">Identify the company&#8217;s primary rivals. Then, compare their sales and profit margins to those of the firm you&#8217;re researching. If there is a significant difference between your company&#8217;s earnings and those of competitors, you can assume that the more lucrative firm has a broad moat.<\/p><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-5 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background wp-element-button\" href=\"https:\/\/upstox.com\/open-account\/?f=FN1853\" style=\"border-radius:50px;color:#0f0027;background-color:#e4fa00\" rel=\"nofollow\"><strong>Open Upstox Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><strong><strong>Disclaimer: <\/strong><\/strong>All the information on this website is published in good faith and for general information purposes only.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"also-read\"><span class=\"ez-toc-section\" id=\"Also_read\"><\/span><strong>Also read:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><a href=\"https:\/\/rakshithpai.com\/best-stock-screeners-indian-stocks\/\" target=\"_blank\" rel=\"noreferrer noopener\">10 Best Stock Screeners For Indian Investors!<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/sukanya-samriddhi-accounts-yojana\/\" target=\"_blank\" rel=\"noreferrer noopener\">Sukanya Samriddhi Yojana Features, Benefits &amp; Eligibility Criteria Explained:<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/10-habits-to-overcome-poverty-become-rich\/\" target=\"_blank\" rel=\"noreferrer noopener\">10 Simple Habits to Overcome Poverty and Become Rich!<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/mutual-fund-investing\/\" target=\"_blank\" rel=\"noreferrer noopener\">Everything you need to know about Mutual Fund Investing:<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/\" target=\"_blank\" rel=\"noreferrer noopener\">Fixed Income Investments &amp; Risks Involved:<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is a MOAT? When we say \u201cMOAT\u201d, It means, \u201cEconomic Moat\u201d. The phrase &#8220;economic moat,&#8221; coined by Warren Buffett, refers to a business&#8217;s ability to retain a competitive edge over its competitors in order to safeguard its long-term earnings and market share from competitors.&nbsp; As with a medieval castle, the moat helps to keep [&hellip;]<\/p>\n<div class='heateor_sss_sharing_container heateor_sss_vertical_sharing heateor_sss_bottom_sharing' style='width:44px;right: -10px;top: 100px;background-color: Dark Blue' data-heateor-sss-href='https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/posts\/4166'><div class=\"heateor_sss_sharing_ul\"><a aria-label=\"Facebook\" class=\"heateor_sss_facebook\" href=\"https:\/\/www.facebook.com\/sharer\/sharer.php?u=https%3A%2F%2Frakshithpai.com%2Fwp-json%2Fwp%2Fv2%2Fposts%2F4166\" title=\"Facebook\" rel=\"nofollow noopener\" target=\"_blank\" style=\"font-size:32px!important;box-shadow:none;display:inline-block;vertical-align:middle\"><span class=\"heateor_sss_svg\" 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