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Yahoo
10 hours ago
- Business
- Yahoo
Top Wide-Moat Stocks Worth a Look for Steady Long-Term Returns
An updated edition of the May 5, 2025 the world of investing, a wide moat describes companies with enduring competitive advantages that shield them from competitors — much like a moat safeguards a castle. Popularized by Warren Buffett, this investment approach focuses on businesses capable of maintaining strong profitability over the long run, thanks to factors such as unique market positioning, powerful brand loyalty, cost efficiencies, network effects and regulatory companies known for their wide moats include Intuit Inc. INTU, Nestle S.A. NSRGY, Costco Wholesale Corporation COST and Visa Inc. V. These firms operate in industries characterized by high barriers to entry, which help protect their market positions and support steady revenue growth by limiting competitive companies often gain their edge from factors like strong brand recognition, network effects, high switching costs for customers, regulatory barriers and economies of scale. These attributes create significant obstacles for new entrants or existing competitors looking to capture market share. As a result, such companies usually enjoy robust pricing power, consistent profit margins, and the ability to reinvest in their operations, further strengthening their long-term competitive appeal of investing in wide-moat businesses lies in their potential to generate reliable, long-term returns. Unlike companies in intensely competitive industries, where earnings often fluctuate due to pricing pressure and fierce competition, wide-moat firms typically demonstrate stronger resilience during economic slowdowns and market volatility. Their strong market positions and healthy balance sheets equip them to withstand challenges that could significantly affect less defensible in wide-moat companies offers a strong approach to long-term wealth building, as these firms generally generate consistent cash flows and create shareholder value through dividends and stock appreciation. 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. Ready to uncover more transformative thematic investment ideas? Explore 30 cutting-edge investment themes with Zacks Thematic Screens and discover your next big opportunity. Intuit, the financial software giant, has established a powerful economic moat through brand loyalty, network effects and high switching costs. Its widely used tax and accounting software has become the industry standard for small businesses, accountants and individual users. The company continuously enhances its artificial intelligence (AI)-driven automation features, further embedding users within its ecosystem. Once customers adopt Intuit's services, switching to a competitor becomes difficult due to the integration of financial data and the learning curve involved in adapting to a new system. This lock-in effect strengthens Intuit's pricing power and enables it to maintain strong has two main products — QuickBooks, which offers financial and business management online services and desktop software to small businesses, and TurboTax, which offers income tax preparation products and services. The space in which Intuit operates has a huge growth opportunity. There are over 29 million small and medium businesses in the United States alone. Intuit, with its QuickBooks Online Advanced solution, is now targeting the midmarket. Furthermore, the number of individuals preferring to file their income tax themselves is increasing rapidly, thereby expanding the scope for Intuit's TurboTax software. For the last few years, the company has been trying to shift its business model from selling software to cloud-based subscription providers. Cloud-based solutions, against software-based ones, have gained popularity as they offer anywhere, anytime access. Cloud is a flourishing part of the technology space and has been gaining momentum in recent years. It is a process by which data or software is stored outside of a computer and is accessible from anywhere at any time via the Internet. This revolutionary idea can lower the IT costs of companies by cutting down the need for servers and staff. The acquisition of Credit Karma has also expanded Intuit's customer base, allowing it to help this Zacks Rank #1 (Strong Buy) company's customers better manage their personal finance requirements. You can see the complete list of today's Zacks #1 Rank stocks the world's biggest food and beverage company, possesses durable competitive advantages. One of its biggest strengths lies in its powerful brand portfolio, boasting over 2,000 brands including globally recognized names such as Nescafe, KitKat, Purina and Gerber. These brands enjoy deep consumer trust, built over decades, creating strong pricing power and customer loyalty. Powerful brands, global reach and operational excellence combine to create a formidable economic moat that positions it for enduring a Zacks Rank #2 (Buy) stock, benefits from vast global distribution networks and scale efficiencies. Operating in more than 190 countries, the company can reach diverse markets quickly and cost-effectively — something few competitors can replicate. NSRGY's unparalleled R&D capabilities further enhance its edge, allowing it to innovate in areas like health, nutrition and plant-based company's consistent cash flows, resilience across economic cycles and strong dividend record make it an attractive choice for long-term investors. Its commitment to sustainability and shifting consumer trends, like health-conscious products, adds another layer of future-ready moat Wholesale leverages a cost leadership moat, offering low prices through a membership-based model and efficient supply-chain management. The company's ability to negotiate lower prices with suppliers and pass the savings on to customers results in strong customer loyalty, high membership renewal rates and consistent revenue growth. Being a consumer defensive stock, Costco has been surviving the market turmoil pretty well. Its key strengths are strategic investments, a customer-centric approach, merchandise initiatives and an emphasis on membership growth. Costco stands tall as a dominant force in the warehouse retail sector, boasting a wide array of high-quality merchandise. The company's emphasis on bulk sales and efficient inventory management allows it to keep prices low, making it a preferred shopping destination for budget-conscious consumers. This competitive pricing strategy helps Costco maintain steady store traffic and robust sales continues to impress with its stellar revenue performance, showcasing its ability to navigate shifting economic dynamics. The consistent growth in membership fee income, coupled with a high renewal rate in key markets like the United States and Canada, underscores its effective customer retention strategies and strong member engagement. With a substantial base of paid household members and increasing executive memberships, Costco ensures a steady flow of high-margin recurring revenues. Costco's digital and e-commerce initiatives also continue to gain traction, contributing to overall sales growth. Its expansion strategy continues to look pretty impressive. The company remains committed to opening new clubs in the domestic and international markets. Costco currently carries a Zacks Rank #3 (Hold).Visa, the global leader in digital payments, benefits from an extensive payment network that connects millions of merchants, banks and consumers worldwide. Its economic moat stems from the network effect, where the value of its services increases as more users and businesses participate. With a near-monopoly in card transactions, Visa generates significant revenues through transaction fees while facing minimal competition due to high regulatory and technological barriers in the payment processing industry. Visa consistently achieves growth in payments volume and processed transactions. The company's robust market position, strategic acquisitions and digital payment trends contribute to revenue expansion. Visa's strategic emphasis on inorganic growth through mergers, acquisitions, and partnerships has solidified its dominance, boasting 50% more payment volume than its closest competitor, Mastercard. The company's partnerships and investments underscore its ongoing efforts to extend its network and maintain a leading position in the payment industry. These strategic moves have expanded its global network, resulting in continuous growth in cross-border commitment to technological innovation is evident in solutions like Visa Token Service, Visa Checkout, and Visa In-App Provisioning, which reinforce its leadership position in the evolving payments landscape. Focused on security, the company drives advancements in digital platforms, promoting technologies such as contactless, scan-to-pay, tap-to-pay, and secure remote commerce. With a significant increase in digital transactions and a decline in traditional methods, Visa anticipates substantial growth in emerging payment trends. This positions Visa for continued success in the evolving financial landscape. Visa currently carries a Zacks Rank #3. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Visa Inc. (V) : Free Stock Analysis Report Costco Wholesale Corporation (COST) : Free Stock Analysis Report Intuit Inc. (INTU) : Free Stock Analysis Report Nestle SA (NSRGY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Globe and Mail
20-05-2025
- Business
- Globe and Mail
Buy 3 Wide Moat Stocks With Double-Digit Near-Term Upside Potential
The wide moat strategy involves investing in companies that not only lead their industries but are also strategically fortified to maintain dominance in the future. The business models of these companies possess durable competitive advantages that shield them from competitors. This strategy isn't just about short-term gains, but securing a portfolio of stocks that can weather economic storms and continue to deliver stable and predictable returns. This investment strategy focuses on companies with unique strengths such as brand recognition, patent protection, proprietary technology, and network effects. These moats ensure long-term profitability and market leadership, making the companies resilient in volatile markets. Here we recommend three Wide Moat stocks with a favorable Zacks Rank. These stocks have solid short-term price upside potential. The stocks are Pfizer Inc. PFE, The Coca-Cola Co. KO and The Walt Disney Co. DIS. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. The chart below shows the price performance of our five picks in the past three months. Pfizer Inc. Pfizer is one of the largest and most successful drugmakers in the field of oncology. Its position in oncology was strengthened with the addition of Seagen. This drug generated sales of $3.4 billion in 2024, up 38% on a pro forma basis. PFE has committed significant resources toward the development of treatments in the fields of oncology, internal medicine, immunology and inflammation and vaccines. In 2024, PFE gained approval for some interesting new products like two gene therapies for hemophilia, Hympavzi (marstacimab) and Beqvez/Durveqtix (fidanacogene elaparvovec). PFE expects cost cuts and internal restructuring to deliver savings of $7.7 billion by the end of 2027. Continued growth in non-COVID sales and significant cost-reduction measures should drive profit growth. Lucrative Short-Term Price Upside Potential for PFE Stock Pfizer has an expected revenue and earnings growth rate of 0.6% and 1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.4% in the last 30 days. Pfizer presently carries a forward P/E of 7.41X for the current-year, compared with 12.96X for the industry and 19.20X for the S&P 500. PFE currently carries a forward P/S of 2.08X for the current-year, compared with 3.15X for the industry and 2.99X for the S&P 500. It also carries a forward P/B of 1.43X for the current-year, compared with 4.66X for the industry and 3.52X for the S&P 500. The short-term average price target of brokerage firms for the stock represents an increase of 23.7% from the last closing price of $23. The brokerage target price is currently in the range of $23-$33. This indicates a maximum upside of 43.5% and no downside. The Coca-Cola Co The Coca-Cola experiences positive business trends, as evidenced by its strong track record of beating expectations. KO has benefited from continued business momentum, aided by higher pricing across markets facing intense inflation and a favorable mix. Coca-Cola's all-weather strategy, combining marketing, innovation, and revenue growth management, supports its vision of a total beverage company and is expected to drive revenue growth in 2025. KO has provided an optimistic view for 2025. Impressive Short-Term Price Upside Potential for KO Shares Coca-Cola has an expected revenue and earnings growth rate of 2.4% and 2.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has remained the same in the last 60 days. KO has a return on equity (ROE) of 45.5% compared with 14.1% for the industry and 16.92% for the S&P 500. The short-term average price target of brokerage firms for the stock represents an increase of 11.1% from the last closing price of $71.93. The brokerage target price is currently in the range of $70-$86. This indicates a maximum upside of 19.6% and a downside of 2.7%. The Walt Disney Co. The Walt Disney reported steady second-quarter fiscal 2025 results wherein revenues and earnings increased year-over-year. Domestic Parks & Experiences saw growth at domestic parks, Disney Vacation Club and Disney Cruise Line, partially offset by the decline at international locations including Shanghai Disney Resort and Hong Kong Disneyland Resort. In Entertainment, DIS expects double-digit percentage segment operating income growth in fiscal 2025. ESPN continues to reinforce its position as sports' dominant platform, with the second quarter delivering its most-watched primetime ever and 32% viewership growth in the key 18-49 demographic. DIS has successfully transformed its streaming business from a loss-leader to a profitable growth engine. After reporting its first-ever Direct-to-Consumer (DTC) operating profit in FY2024, the momentum has accelerated in FY2025 with second-quarter DTC operating income reaching $336 million. Attractive Short-Term Price Upside Potential for DIS Stock The Walt Disney has an expected revenue and earnings growth rate of 3.8% and 15.1%, respectively, for the current year (ending September 2025). The Zacks Consensus Estimate for current-year earnings has improved 4.6% in the last 30 days. At present, DIS carries a forward P/E of 19.83X for the current year, compared with 20.37X for the industry and 19.20X for the S&P 500. The short-term average price target of brokerage firms for the stock represents an increase of 10.9% from the last closing price of $112.66. The brokerage target price is currently in the range of $100-$148. This indicates a maximum upside of 31.4% and a downside of 11.2%. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. Today, See These 5 Potential Home Runs >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CocaCola Company (The) (KO): Free Stock Analysis Report Pfizer Inc. (PFE): Free Stock Analysis Report The Walt Disney Company (DIS): Free Stock Analysis Report
