Top Wide-Moat Stocks to Buy for Long-Term Wealth and Stability

Globe and Mail

4 days ago

An updated edition of the June 17, 2025 article.
A wide moat refers to companies with lasting competitive advantages that protect them from rivals, similar to how a moat defends a castle. Made famous by Warren Buffett, this strategy targets businesses that can sustain strong long-term profitability due to factors like distinct market positions, strong brand loyalty, cost advantages, network effects and regulatory barriers.
Among the companies that exemplify wide economic moats are Lam Research Corporation LRCX, Adobe Inc. ADBE, The Walt Disney Company DIS and Yum! Brands, Inc. YUM. These companies compete in industries with significant barriers to entry, which safeguard their market positions and promote consistent revenue growth by reducing the risk of new competitors.
Wide-moat companies typically derive their advantage from factors such as strong brand recognition, network effects, high customer switching costs, regulatory hurdles and economies of scale. These elements create formidable challenges for new or existing rivals attempting to gain market share. Consequently, these firms often benefit from solid pricing power, stable profit margins, and the capacity to reinvest in their businesses, further reinforcing their long-term competitive edge.
The attraction of investing in wide-moat businesses stems from their ability to deliver steady, long-term returns. In contrast to companies in highly competitive industries — where profits are more vulnerable to pricing pressure and intense rivalry — wide-moat firms tend to show greater stability during economic downturns and market turbulence. Their solid market positions and robust balance sheets enable them to weather challenges that might severely impact less well-protected competitors.
Investing in wide-moat companies provides a solid strategy for building long-term wealth, as these businesses typically produce steady cash flows and deliver shareholder value through dividend payments and stock price growth. While no investment is entirely risk-free, companies with strong economic moats provide a level of durability that many investors seek in an ever-changing market. Our Wide Moat Screen makes it easy to identify high-potential stocks at any given time — just like the ones mentioned above.
4 Wide-Moat Stocks to Buy Now
Lam Research benefits from its leadership position in wafer fabrication equipment, specializing in etch and deposition technologies critical to semiconductor manufacturing. Its deep expertise, long-term customer relationships, and the enormous capital requirements of its industry form a powerful competitive moat. Technology inflections in the semiconductor industry, including 3D device scaling, multiple patterning, process flow, and advanced packaging chip integration, are expected to continue driving sustainable growth and increasing LRCX's served market for its products and services in the deposition, etch and clean businesses.
Lam Research has high exposure to the memory segment, which is likely to see tremendous growth in the long run. The semiconductor memory market is being driven by the growing proliferation of artificial intelligence (AI), Machine Learning, Blockchain, cloud computing, big data, mobile devices and Internet of Things. The huge explosion of data as a result of these advanced technologies requires it to be stored, processed and analyzed to increase efficiency and drive the growth of the business. This has been leading to increased demand for memory chips. In addition, increasing adoption of semiconductor components across various industries, including automotive, consumer electronics, and IT & telecom, remains a tailwind.
Lam Research is at the center of the AI revolution, with its advanced fabrication tools playing a crucial role in enabling high-performance computing. Also, with AI applications requiring more efficient and high-speed memory, high-bandwidth memory adoption is accelerating. Additionally, Lam is benefiting from increased complexity in semiconductor manufacturing, where etch and deposition technologies are crucial. These factors position this Zacks Rank #2 (Buy) stock as a key enabler of next-generation AI chips. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Adobe maintains dominance in creative software through tools like Photoshop and Illustrator. Its products are deeply embedded in professional workflows, creating high switching costs, while its subscription model ensures recurring revenues.
Adobe's tools, like Acrobat AI Assistant and Adobe Express, are attracting business professionals and creators. Acrobat AI Assistant uses conversational interfaces to make it easier for users to read digital documents and gain insights within a short timeframe. Adobe Express utilizes AI to empower consumers to quickly design and publish content through conversational AI in an easy-to-use, all-in-one application. Adobe is integrating these solutions to facilitate a smoother creation-to-consumption process across mobile apps, web browsers and desktop offerings. Adobe's monthly active users across these categories surpassed more than 700 million users at the end of the second quarter of fiscal 2025.
Adobe's strategy of offering an AI-powered, comprehensive creative platform that extends from idea generation through creation to mass production and delivery is addressing the needs of Creative and Marketing Professionals. Firefly is enhancing the capabilities of Creative Cloud desktop applications. The Firefly App is attracting users for AI-powered content ideation, creation and production, and its support for third-party models, including from Alphabet GOOGL division Google's Imagen and Veo, Microsoft MSFT -backed OpenAI's image generation and Black Forest Labs' Flux, is a key catalyst. Adobe Firefly App availability on mobile is expected to further boost its popularity.
Adobe, a Zacks Rank #2 stock, is leveraging Adobe Experience Platform (AEP) and native applications to deliver unified and personalized customer experiences. The launch of AEP AI assistant enables teams across the business to interact with data smoothly and efficiently. The innovative solution helps customers leverage their first-party customer data and deliver more relevant, high-impact advertising experiences driven by direct customer relationships.
Disney benefits from unmatched brand equity, irreplaceable content libraries, and a global media ecosystem that spans streaming, merchandise and theme parks — each reinforcing the other and creating a powerful network effect. Disney has successfully transformed its streaming business from a loss-leader to a profitable growth engine. The business generated $336 million in operating income during second-quarter fiscal 2025, demonstrating sustainable profitability after years of investment. Disney+ added 1.4 million subscribers to reach 126 million total, defying analyst expectations and showcasing platform resilience. This profitability milestone validates Disney's strategic focus on quality content and effective pricing strategies.
ESPN continues reinforcing its position as sports' dominant platform, with fiscal second-quarter delivering its most-watched primetime ever and 32% viewership growth in the key 18-49 demographic. The ESPN streaming service launch in Fall 2025 represents a major revenue catalyst, creating an entirely new revenue stream from Disney's most profitable content. Combined with strategic partnerships like the Disney- Amazon AMZN advertising integration and Disney-ITV content sharing initiative, the company has created sophisticated monetization capabilities that significantly enhance revenue per user. Disney's bundle strategy continues driving higher retention rates while expanding international reach.
Disney's $60 billion capital investment program over 10 years represents the largest theme park expansion in the company's history, with multiple projects delivering through the second half of 2025. The company increased its parks' capital expenditures to $4.3 billion in second-quarter fiscal 2025, targeting 20-25% capacity increases by 2027 with a projected mid-teens return on invested capital.
Magic Kingdom's largest-ever expansion includes the new Villains Land and Cars-themed Frontierland replacement, both beginning construction in 2025. Monsters, Inc. Land at Hollywood Studios will feature Disney's first suspended coaster, while Animal Kingdom's Tropical Americas adds Indiana Jones and Encanto attractions. These developments address the persistent demand-supply imbalance that has enabled this Zacks Rank #2 stock to maintain premium pricing power.
Yum! Brands benefits from a strong franchise model and global scale. Brand loyalty, supply-chain efficiencies, and broad geographic reach give it an edge over regional competitors. The company's KFC, Pizza Hut and Taco Bell brands are global leaders of the chicken, pizza and Mexican-style food categories, respectively.
YUM! Brands, a Zacks Rank #2 stock, is gaining traction with its next-generation growth initiatives aimed at capturing evolving consumer preferences. YUM's 'easy operations' pillar is focused on streamlining restaurant operations and empowering team members. The company has extended its Byte Restaurant Coach tool to an additional 5,000 stores. This digital platform supports consistent and scalable performance management through routine tools and training.
Taco Bell U.S. also onboarded 1,500 more restaurants to the Byte Back of House platform, raising the total to 3,000 stores. This progress marks a step forward in developing a fully connected kitchen ecosystem aimed at enhancing efficiency and enabling data-driven operational decisions. YUM plans for full system-wide adoption in 2025.
YUM! Brands reported steady progress in global development in the first quarter, with 751 store openings across 68 countries. KFC led the development effort, opening 528 units — the second-highest first-quarter total in the brand's history — driven by strong performance in key markets such as China, India, Japan and Thailand. With a global average payback period of less than five years, and even more attractive returns in China, Thailand and the Middle East, KFC continues to be a cornerstone of YUM's expansion strategy. Meanwhile, Pizza Hut added 198 stores in 34 markets, and Taco Bell posted 24 gross openings. Taco Bell also remains on track to achieve 100 net international openings in 2025, with the strongest momentum in the U.K., Spain and India.
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