Ben Hobson | Jul 03, 2020 10:45
Given the present disruption and volatility in the stock market, it is more important than ever to identify high quality stocks for your portfolio. That means knowing how to find highly profitable companies that are able to fend off competitive threats over the long term.
These sorts of stocks are different because they've got what billionaire investor Warren Buffett calls economic moats.
Defensive moats let companies compound returns at above-average rates over long periods. They can be an investment goldmine. And while these stocks can be hard to find, there are signs that Intel (NASDAQ:INTC) might be one of them.
Before we get started on why this looks like a high quality business, here are some of the main ways that a company can build a strong moat around itself:
So the question is whether Intel is showing the signs of having a profitable competitive edge - and the way to find that out is to look at its financials...
Some of the biggest indicators of a moat involve persistent strong margins and high levels of cash generation – cash being very important given the uncertainty about the economy. Here are a few ways of gauging these characteristics - and how Intel compares:
Disclaimer: These articles are provided for information purposes only. The content is not intended to be a personal recommendation. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. The author has no position in the stocks mentioned, unless otherwise stated.
Written By: Ben Hobson
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