5 Types of Moat

If you invest, you MUST be able to identify a moat.

Here are 5 powerful moat sources:

INTANGIBLE ASSETS:

Example: Brand, Patents, Copyrights

Wide: Coca-Cola
Narrow: Dr. Pepper Snapple
None: United Airlines

SWITCHING COSTS:

It would be expensive in terms of cost, time, or training, to switch to an alternative provider.

Wide: Oracle
Narrow: Salesforce
None: Macy's

NETWORK EFFECT:

A network becomes more powerful as more users join.

Wide: CME Group
Narrow: NYSE Euronext
None: ADM

🏰 COST ADVANTAGE:

A company can produce a product or service at a lower internal cost than competitors.

Wide: UPS
Narrow: FedEx
None: Alcoa

EFFICIENT SCALE:

A company's buying power or market position allows it to dominate its category.

Wide: Kinder Morgan
Narrow: Southern Company
None: Paris Aeroport