A Catalog of Wonderful Companies: State of the Project
This page is regularly updated with companies that I deem to be 'wonderful.' I evaluate a new company every single week to determine if it is worth adding to this list.
A truly great business must have an enduring “moat” that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business “castle” that is earning high returns. Therefore a formidable barrier such as a company’s being the lowcost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with “Roman Candles,” companies whose moats proved illusory and were soon crossed. - Warren Buffett, 2007 Berkshire Shareholder Letter
My goal for this website is to research a different company every week.
I delve into understanding each company's operations to determine if it has a lasting competitive advantage, or moat. Throughout the week, I thoroughly analyze the company's filings, listen to earnings calls, and gather extensive information. By the weekend, I publish a comprehensive write-up highlighting the key aspects of the business, its history, its moat, and its current prospects.
I evaluate each company using a detailed checklist.
Over time, I am building a watchlist of companies that I consider exceptional. I continuously monitor their stocks and periodically assess their valuation.
Paid subscribers receive exclusive access to these detailed updates. This platform is entirely reader-supported, without any advertisements. If you would like to support this ongoing project, please consider subscribing.
Over the years, this ongoing project has resulted in an extensive list of exceptional companies worth continued monitoring.
Below is a comprehensive compilation of the companies I've reviewed and found noteworthy, along with links to the corresponding articles.
I'll continually update this list as I conduct weekly analyses and evaluate additional companies.
Pool Corp (POOL) - Pool Corp’s moat comes from unmatched scale, deep supplier and customer relationships, technology integration, and highly recurring maintenance-driven demand. Its vast distribution network, local service expertise, and digital tools create switching costs smaller rivals can’t match. Long term, revenue should grow ~7% annually, with EPS rising slightly faster through steady buybacks.
The Cooper Companies (COO) - Cooper’s moat stems from deep doctor relationships, high switching costs, and trusted, innovative contact lenses that patients keep for years. Unique fit, material design, and training needs make switching risky for both patients and providers. CooperSurgical also benefits from long-standing ties with clinicians, reinforcing durable, recurring demand across its medical product portfolio.
Amphenol (APH) - Amphenol’s moat comes from mission-critical, custom connectors, high switching costs, embedded engineering partnerships, and efficient, diversified operations. Its reliable products and innovation drive customer loyalty across EVs, aerospace, telecom, and industry. Long-term revenue growth near 8% and stable margins should support steady EPS growth aligned with these structural technology and electrification trends.
The TJX Companies (TJX) - TJX’s moat stems from massive scale, decades-long supplier relationships, and its fast-turning “treasure hunt” shopping experience. Constantly refreshed, discounted brand-name assortments drive repeat traffic and loyalty. Trusted vendor ties and global buying power sustain supply advantages. With steady 5–7% revenue growth and buybacks, EPS should grow high single to low double digits.
Jack Henry & Associates (JKHY) - Jack Henry’s moat stems from mission-critical core banking software, long client relationships, and costly, risky switching. Its clean, unified platforms and expanding suite of integrated tools deepen dependence, while payment services add stability. Low churn and reliable profitability reflect its strong, durable position despite larger competitors.
Xylem (XYL) - Xylem’s moat comes from mission-critical water infrastructure, proprietary technologies, and a global service network that makes switching costly and risky. Its entrenched installed base and trusted reputation ensure recurring revenue and customer stickiness.
Kimberly Clark (KMB) - Kimberly-Clark’s moat stems from iconic brands, global scale, and dominance in essential personal-care products. Strong loyalty, retailer partnerships, and premium positioning support pricing power and resilience. Growth will be modest—about 3% revenue—while dividends, buybacks, and margin improvements drive returns. Despite private-label pressure, its competitive position remains durable.
Littelfuse (LFUS) - Littelfuse’s moat comes from mission-critical components that stay embedded in products for years, making switching costly. Its reliability, global reach, and exposure to EVs, renewables, automation, and electrification support steady growth. Revenue near 10% and EPS around 12% appear sustainable as margins recover and long-term demand drivers strengthen.
Fiserv (FISV) - Fiserv’s moat stems from deep integration into bank core systems, large-scale payment networks, and a broad product ecosystem that makes switching costly and risky. Its reliability and scope reinforce customer stickiness. Future growth should moderate, with revenue and EPS likely rising about 8% annually after past acquisition-driven expansion.
Floor & Decor (FND) - Floor & Decor holds a modest yet meaningful moat built on scale, broad assortments, efficient global sourcing, and a differentiated customer experience. These advantages aid growth but remain replicable and cyclical. Store expansion and normalization in housing should support future performance, with revenue and EPS likely growing about 10% and 12% annually.
West Pharmaceutical Services (WST) - West Pharmaceutical Services dominates injectable drug packaging through components embedded in regulatory filings, making supplier switches costly. Its proprietary products and premium services deepen customer reliance, especially for biologics. Pandemic-driven margin gains have normalized; future revenue and EPS growth should align near 5% annually, supported by stable demand and strong customer stickiness.
Merck (MRK) - Merck’s moat stems from patents, research strength, scale, and leadership in oncology and vaccines. Strong cash flow funds R&D, sales reach, and manufacturing advantages. Yet major patent expirations, modest growth, and political pressures limit upside. Merck remains profitable and durable, but future returns hinge more on stability, dividends, and buybacks than growth.
Applied Materials (AMAT) - Applied Materials’ massive R&D investment, integrated factory presence, and highly customized, hard-to-replace tools create huge switching costs. Its broad product portfolio and deep, long-term partnerships with top chipmakers reinforce its technology leadership, making it a trusted, enduring partner with a strong moat and consistently robust profitability.
Genuine Parts Company (GPC) - GPC’s moat comes from its NAPA brand, dense store and distribution network, rapid delivery, and strong supplier ties. It dominates U.S. commercial auto parts, owns a leading industrial division, and gains scale from private-label products. European operations add reach but lag North America in brand strength and efficiency.
J.B. Hunt (JBHT) - J.B. Hunt has built a durable moat through its vast intermodal network, exclusive rail partnerships, and strong industry relationships. Its scale, infrastructure, and network effects create high entry barriers and reliable service. As the freight market consolidates, Hunt is positioned for long-term growth, margin recovery, and rising per-share profitability.
STERIS (STE) - STERIS has built a resilient business through high switching costs, long-term service contracts, and regulatory barriers. Its sterilization equipment and services are essential in healthcare, earning strong customer loyalty. With 80% recurring revenue, steady growth, and stable margins, STERIS offers dependable performance despite share dilution.
LKQ Corporation - LKQ leverages massive scale, fast distribution, deep insurer partnerships, and efficient vehicle recycling to dominate the auto-parts market. Its buying power, rapid delivery network, insurer-directed salvage supply, and programs like KeysIQ create stable demand, cost advantages, and strong customer loyalty, forming a moat few competitors can match.
Nordson (NDSN) - Nordson Corporation has a strong economic moat due to its specialized, integrated equipment, high customer loyalty, and recurring revenue from replacement parts. Its diversified markets, smart acquisitions, and focus on quality over price create stability and competitive advantage, while expansion into medical devices strengthens recurring sales and deepens industry ties.
Manhattan Associates (MANH) - Manhattan Associates’ software is deeply embedded in customers’ supply chains, making it costly and risky to replace. High switching costs, complex integrations, and mission-critical functionality drive strong retention and pricing power. With recurring cloud revenue, a trusted brand, and ongoing buybacks, Manhattan is well-positioned for steady earnings growth around 8% annually.
Amazon (AMZN) - Amazon’s moat spans two dominant businesses: e-commerce and cloud computing. Its retail edge comes from unmatched logistics, Prime-driven loyalty, and data-driven network effects. AWS, the global cloud leader, benefits from deep customer integration, scale, and high switching costs. Together, they support strong revenue growth, margin expansion, and long-term shareholder value creation.
Moody’s (MCO) - Moody’s holds a powerful moat through its essential role in global debt markets, where its credit ratings are deeply embedded and often legally required. High switching costs, regulatory backing, and a trusted brand protect its position. With moderate revenue growth and strong buybacks, Moody’s can sustain ~7% annual EPS growth long term.
Thermo Fisher (TMO) - Thermo Fisher Scientific has a durable moat built on scale, product breadth, and deep customer ties. Its one-stop-shop model, high switching costs, and trusted brand create strong retention. Serving diverse clients across life sciences, it benefits from industry growth and is well-positioned to sustain ~7% annual revenue growth long term.
Mastercard (MA) - Mastercard has a powerful economic moat built on its global payment network, trusted by consumers, merchants, and banks. High entry barriers and strong network effects protect its dominance. Despite slowing growth, it remains resilient, with solid earnings driven by share buybacks, high margins, and ongoing global demand for digital payments.
General Mills (GIS) - General Mills’ moat is anchored by iconic brands, pricing power, shelf dominance, and a vast distribution network. Its scale and brand loyalty allow premium pricing and resilience in mature markets. Despite modest growth expectations, strong retail ties, product diversity, and steady dividends support its durable advantage in the consumer staples industry.
PPG Industries (PPG) - PPG’s moat relies on strong customer ties, high switching costs, brand strength, and global scale. Its coatings meet strict safety and performance standards, making switching difficult. With trusted brands and efficient global operations, PPG retains customers and commands premium pricing. Future growth will likely align with revenue, driven by scale and acquisitions.
IDEX Corp (IEX) - IDEX has a strong competitive moat built on high switching costs, mission-critical products, and reliable performance. Serving niche industries, it benefits from limited competition, recurring aftermarket revenue, and a razor-and-blade model. Its strong branding, customization capabilities, and pricing power ensure steady growth, high margins, and long-term customer loyalty.
Chemed (CHE) - Chemed Corporation, which owns both VITAS and Roto-Rooter, benefits from two strong, essential service businesses with durable competitive advantages. VITAS and Roto-Rooter thrive on scale, trust, and operational efficiency—one in complex hospice care, the other in urgent plumbing. Both enjoy pricing power, steady growth, and resilience against disruption.
FedEx (FDX) - FedEx’s moat stems from its global scale, regulatory barriers, cost efficiency, and strong brand. Its vast air and ground network, anchored by Memphis, enables reliable, low-cost delivery. Regulatory advantages and automation deepen its edge. With steady growth and capital returns, FedEx remains dominant in logistics and e-commerce fulfillment.
Tapestry (TPR) - Tapestry’s moat lies in its strong brand portfolio, especially Coach, which leads through quality, pricing power, and global reach. Its direct-to-consumer model, digital strategy, and international growth—particularly in Asia—enhance margins and relevance. With renewed brand strength and premium focus, Tapestry is poised for accelerated growth and margin expansion.
Mondelez (MDLZ) - Mondelez’s moat is driven by iconic brands, global scale, strong retail relationships, and pricing power. Its products are deeply ingrained in consumer habits, ensuring resilience against competition. Despite modest projected 3% growth, concerns over GLP-1 drugs are likely overstated due to snacking habits, geographic diversification, and temporary consumption shifts.
SEI Investments (SEIC) - SEI benefits from high switching costs in financial services, embedding its platforms into banking, investment advisory, and institutional operations. Long-term contracts and complex integrations deter transitions, ensuring client retention. With steady 5.3% annual growth, future expansion will likely track revenue, as margin improvements remain limited despite continued business acquisitions.
Danaher (DHR) - Danaher’s moat is driven by deep client integration, high-margin recurring consumables, and strong patent protection. Its products embed into customer workflows, ensuring long-term reliance. Proprietary consumables generate steady revenue, while patents safeguard innovations. With a history of strategic acquisitions, Danaher is poised for sustained 5% annual growth and market leadership.
Linde plc (LIN) - Linde’s moat is driven by its global scale and deep customer integration. Its essential industrial gases serve critical industries like healthcare and manufacturing, with long-term contracts ensuring customer retention. Its vast infrastructure and economies of scale create high barriers to entry, enabling strong margins and steady growth of approximately 6% annually.
Five Below (FIVE) - Five Below has a narrow but meaningful moat, differentiating itself from dollar stores by targeting pre-teens and teens with a fun, vibrant shopping experience. Its "treasure hunt" model, engaging store design, trendy product mix, and strong social media presence drive customer loyalty. With aggressive expansion, double-digit growth remains highly likely.
Target (TGT) - Target’s moat stems from its scale, strong brand, store investments, and digital strategies. Its extensive store network enables cost advantages and efficient omnichannel operations. Trend-forward branding differentiates it from Walmart, while digital innovations like curbside pickup and Shipt drive growth. With margin improvements, EPS growth is projected at 7% annually.
Air Products & Chemicals (APD) - APD’s competitive moat stems from its scale, deeply integrated customer relationships, and essential industrial gases. Its long-term contracts and infrastructure create high switching costs. Despite modest revenue growth (1.5% annually), EPS has surged (14% annually) due to efficiency gains. Future growth is driven by green hydrogen and sustainability investments.
Northrop Grumman (NOC) - Northrop Grumman’s competitive moat is built on regulatory barriers, U.S. government ties, and multi-decade defense programs like the B-21 bomber. Its $84.2 billion backlog ensures financial stability, while technical complexity deters competitors. Considering historical defense funding trends, global security needs, and Northrop’s maintenance & support, the company should enjoy continued growth and long-term dominance.
EMCOR Group (EME) - Emcor’s competitive moat is built on deep client relationships, recurring revenue, and vast scale. Its integrated services and maintenance contracts foster reliance, especially in critical infrastructure. Emcor’s national reach, reputation, and economies of scale deter competition. Despite past high EPS growth, future expansion is projected at 5–7% due to market dynamics.
Rockwell Automation (ROK) - Rockwell’s competitive advantage lies in its deep integration into clients’ manufacturing processes and interdependent hardware-software solutions, fostering long-term loyalty. Its systems are critical and costly to replace, ensuring customer retention. With re-shoring trends driving automation demand, Rockwell is poised for steady growth, projected at 4%, supported by strong margins and recurring revenue.
Lam Research (LRCX) - Lam Research’s moat is built on its essential semiconductor manufacturing tools, particularly in etch and deposition processes for technologies like 3D NAND. Deep customer integration, significant R&D investment, global infrastructure, and reliable support drive loyalty. Despite industry cyclicality and competition, Lam’s innovation and scale ensure sustained growth, projected at 8% annually.
Agilent (A) - Agilent's moat is driven by its focus on life sciences and diagnostics, offering reliable, regulated instruments like mass spectrometers and fostering client loyalty. Its recurring revenue from consumables, services, and software deepens customer reliance. Strong financials, consistent innovation, and life sciences growth sustain Agilent’s competitive edge and long-term value creation.
Allegion (ALLE) - Allegion’s competitive moat is built on product integration, regulatory compliance, strong brand recognition, and economies of scale. Its deeply embedded smart home and commercial systems create customer stickiness, while trusted brands like Schlage and global scale reinforce dominance. With steady innovation and 6% annual growth, Allegion remains a security industry leader.
Gentex (GNTX) - Gentex’s moat stems from its 90% dominance in the automatic-dimming mirror market, high-quality products, and strong automaker relationships. Switching suppliers is costly and complex, fostering long-term loyalty. Regulatory standards protect mirror demand, while Gentex adapts with innovations like Full Display Mirrors. Projected 5-7% growth reflects its resilient, cyclically aligned business.
MSC Industrial Direct (MSM) - MSC Industrial Direct’s moat is rooted in its vast scale, extensive product catalog, and reliable nationwide distribution network. Its value-added services, like inventory management and industrial vending machines, deepen client relationships. Strong supplier partnerships provide pricing advantages, while its trusted reputation and operational efficiency ensure steady 5% annual growth and long-term stability.
ResMed (RMD) - ResMed's moat stems from its early dominance in the CPAP market, strong brand loyalty, and a robust portfolio of 8,200 patents. Its integration of cloud-based software, global market leadership, and innovations in respiratory care drive growth. Rising awareness of sleep apnea and underdiagnosis ensure sustained demand, despite potential challenges like GLP-1 drugs.
Sprouts Farmers Market (SFM) - Sprouts appeals to health-conscious, price-sensitive shoppers by offering a one-stop-shop for organic, unprocessed foods at affordable prices. Competing with Whole Foods, Sprouts’ smaller, efficient stores and loyal customer base drive growth. With plans to expand nationwide and strong financials, Sprouts is well-positioned to capture market share in the growing health-focused segment.
CSX (CSX) - Class I railroads, like CSX, have strong moats due to industry consolidation, regulatory barriers, and cost advantages over trucking. CSX’s vast network and entrenched position ensure dominance, but growth is constrained by stagnating revenues and reliance on coal, a declining segment.
Ecolab (ECL) - Ecolab’s moat lies in sticky customer relationships, regulatory expertise, tailored services for large clients, and economies of scale. Customers rely on Ecolab’s equipment and consumables, fostering long-term ties. Its focus on regulated industries and sustainability solutions like water treatment drives growth. Economies of scale enhance competitiveness, ensuring steady revenue expansion.
Columbia Sportswear (COLM) - Columbia Sportswear's strong competitive advantage stems from its respected brand portfolio, high-quality products, history of innovation, and extensive global distribution network. Its well-known brands like Columbia, Mountain Hardwear, and SOREL ensure customer loyalty, while its durable, innovative products rival pricier competitors. Columbia's robust distribution channels and long-standing relationships with wholesalers further strengthen its market reach. With a 7.5% CAGR over the past decade, Columbia is poised for sustainable growth, supported by expanding international markets.
Texas Roadhouse (TXRH) - Texas Roadhouse stands out from other casual dining chains with its exceptional value, strong employee engagement, and a loyal customer base. The company's financials demonstrate sustained growth, driven by performance-based incentives for staff and consistent quality. Its competitive advantage lies in affordable, high-quality meals, particularly steaks, and a strong brand appeal. With 741 locations and room for international expansion, Texas Roadhouse is well-positioned for steady growth.
Align Technologies (ALGN) - Align Technologies dominates the orthodontic market with its Invisalign product, which holds 90% market share due to strong brand recognition, effectiveness, and deep integration with orthodontists. Despite rising competition from cheaper alternatives, Invisalign's professional oversight and established reputation keep it a leader. The company has treated 17 million patients, achieved 19.3% growth over a decade, and is expanding into teen and international markets, positioning it for continued growth in the 10-15% range.
IDEXX Laboratories (IDXX) - IDEXX Laboratories dominates the animal diagnostics market, built on its reputation for innovation and reliability. Its recurring revenue model through software solutions deepens market integration and revenue stability. Veterinarians' loyalty to IDEXX is strong due to its reliable products and significant training investments. IDEXX's global scale and pricing power improved gross margins from 51% in 2009 to 59.8% in 2023. Despite competition, IDEXX's 10% annual revenue growth, driven by rising pet care spending, is expected to continue.
Cognizant (CTSH) - Cognizant’s main strength is its strong, long-term relationships with major companies, deeply integrating into their processes. This makes it hard for companies to switch back to in-house management without risking disruptions. Over 90% of Cognizant's revenue comes from existing clients. They excel in identifying efficiencies and are investing in AI to enhance services. Cognizant has moved from rapid growth to steady growth, with potential for better margins and returns through AI solutions and consulting services.
Fair Isaac Corporation (FICO) - FICO's moat is strong due to its near-monopoly on consumer lending decisions, with the FICO score embedded in lender processes and guidelines. Despite competitors, lenders rely on FICO for its predictive accuracy. FICO's pricing power and strategic pricing adjustments have driven significant growth, with revenues growing at a 7.4% CAGR over the last decade and free cash flow at 15%. It has a dominant market position, high operating margins, and strong return on invested capital.
Casey's General Stores (CASY) - Casey's General Stores maintains a strong economic moat through strategic geography, community integration, operational efficiency, and brand reputation. Dominating small Midwestern towns, it serves as a crucial provider of fuel and groceries. With 50% of stores in towns with populations under 5,000, Casey’s integrates deeply into local communities through rewards programs, grants, and donations. Its self-sufficient distribution network and popular private-label products further cement its market position. The company is poised for steady growth.
Procter & Gamble (PG) - P&G maintains a strong economic moat due to its robust brand strength, large scale, and strong customer-supplier relationships. Key brands like Tide and Gillette exemplify this advantage. Despite competition from niche brands and private labels like Costco's Kirkland, P&G's market position remains resilient. Innovations such as Tide Pods further cement its dominance. While growth has been modest at 3-5%, P&G offers reliable returns and steady dividend growth.
Veeva Systems (VEEV) - Veeva leveraged early cloud adoption and continuous improvement to dominate life sciences cloud services, securing relationships with major companies like Pfizer and Moderna. With 80% of global pharma sales reps using Veeva CRM, they hold the top spot in cloud software spending. Their subscription-based model ensures recurring revenue, and switching providers is costly for clients. Veeva’s growth prospects are strong, driven by the aging population and ongoing innovation.
Quest Diagnostics (DGX) - Quest Diagnostics' strong moat is due to its extensive network, insurer relationships, and regulatory complexities. Barriers to entry include geographic reach, insurer ties, and PAMA regulations. Despite potential regulatory and technological risks, Quest's steady growth is driven by aging demographics and rising chronic disease rates.
Visa (V) - Visa leveraged network effects and first-mover advantages to dominate the card payment industry. Their extensive networks incentivized businesses to accept their payments, solidifying their dominance. Visa's resilience is bolstered by high operating margins, minimal traditional competition, and unlikely regulatory disruptions, ensuring continued growth and profitability.
Intuitive Surgical (ISRG) - Intuitive Surgical's dominance in robotic surgery stems from being the primary choice for hospitals and extensive surgeon training. Despite emerging competitors, switching costs and entrenched familiarity protect its position. Intuitive's recurring revenue from device use and growth potential in robotic surgery adoption, expected to expand globally, suggest sustained 12-15% growth.
Netflix (NFLX) - Netflix's formidable moat is built on its unmatched scale and distribution network. As streaming dominates content consumption, Netflix remains essential, with Americans spending nearly three hours daily on streaming. Early entry, extensive infrastructure, and strong household bonds make replicating its success difficult. Financially, Netflix's strategic shifts have improved profitability.
Johnson & Johnson (JNJ) - JNJ's pharmaceutical moat relies on patents and substantial scale, exemplified by long-protected drugs like CARVYKTI and TREMFYA. Urgency in medication needs and significant R&D investments bolster this position. Medical devices benefit from integration, patents, and brand loyalty. JNJ's growth prospects may be modest, but the company remains a strong source of shareholder returns through dividends and buybacks.
Cboe Global Markets (CBOE) - Cboe excels with exclusive offerings like the VIX, strategic partnerships, regulatory barriers, and essential financial services. Its dominance is fortified by alliances with S&P Global, IHS Markit, and FTSE Russell, and a robust market data repository. Cboe has strong growth prospects, driven by trading volumes and new products.
MarketAxess (MKTX) - MarketAxess leads electronic bond trading, which has grown from 13% to 40% of total market volume since 2013. Its extensive network of 2,108 client firms and focus on credit markets solidify its competitive edge. With ongoing technological advancements and market expansion, MarketAxess has very strong growth prospects.
Nucor (NUE) - Nucor is a wonderful company in a bad industry. Nucor's competitive advantage lies in its cost leadership and resilience amidst steel industry cycles. Its ability to consistently operate at lower costs and adjust production levels strategically contributes to sustained profitability. I am extremely impressed with their business model. If considering an investment in a company like Nucor, I lean towards purchasing during downturns in the steel industry.
Ross Stores (ROST) - Ross Stores has built a competitive moat through strong manufacturer relationships for surplus inventory and a loyal customer base attracted by low prices and frequent merchandise rotation. Commanding 30% of the off-price retail market, Ross outperforms competitors with a 37% average ROIC. Expansion opportunities remain, supporting potential 5% sales growth.
Coca-Cola (KO) - Coca-Cola's economic moat stems from its iconic brand, global marketing, and low production costs relative to consumer budgets. Its enduring consumer loyalty, distribution scale, and diversified product portfolio reinforce its market dominance. While growth may be modest, high returns on capital and cash flow sustain shareholder value.
Ball Corporation (BALL) - Ball dominates the aluminum can market. Its strategic placement near major beverage clients and long-term contracts create formidable barriers to entry. As demand for aluminum cans rises, Ball's growth prospects look promising.
Huntington Ingalls Industries (HII) - The U.S. military's vast resources and strategic expansion plans secure Huntington long-term contracts, ensuring steady business. Huntington's complex operations, requiring high expertise and secure U.S.-based facilities, cannot be easily replicated. The company's growth is bolstered by the Navy's fleet expansion, with minimal risk of reduced military spending due to geopolitical threats.
Rollins, Inc. (ROL) - Rollins secures a competitive edge through strong brands, customer relationships, and cost efficiencies. As North America's top pest control company with recurring revenue, Rollins thrives on consistent business. Its scale drives cost advantages, aiding profitability. With a 20% market share and growth potential, Rollins continues expanding through acquisitions.
Diageo Plc (DEO) - Diageo's strong economic moat is driven by its iconic brands like Johnnie Walker and Guinness, known for quality and luxury. The aging process, premium pricing, and global scale create significant competitive barriers. Diageo's growth is fueled by premium drink trends and emerging market demand, ensuring consistent expansion and robust shareholder yields.
LabCorp (LH) - LabCorp's 2,000 testing centers and strong ties with healthcare providers and insurers create a robust moat. Regulatory barriers protect their dominance, while increasing healthcare demand and strategic acquisitions drive sustained growth.
Boston Beer (SAM) - Boston Beer has built a moat with strong brands like Samuel Adams, Angry Orchard, Truly Hard Seltzer, and Twisted Tea. Its extensive distribution network of 400 U.S. wholesalers and high-quality, innovative products bolster its market presence. With a solid reputation, aggressive marketing, aBoston Beer is poised for sustained growth.
Kroger (KR) - Kroger's moat is its size as the largest U.S. grocery chain, focusing on traditional grocery experiences. Kroger's robust supply chain, favorable supplier pricing, and efficient distribution network give it a competitive edge. Its vast data from loyalty programs and unique private label brands further strengthen its position. Despite competition from retail giants, Kroger’s growth prospects remain strong with potential for further expansion through acquisitions.
Accenture (ACN) - Accenture's moat is built on trust and a stellar reputation for handling sensitive data and processes. Deep integration into client operations creates significant barriers to competitors. Long-term contracts and industry-wide expertise make Accenture indispensable. Accenture's growth prospects remain strong and challenging for new entrants to disrupt.
Ferrari (RACE) - Ferrari's robust economic advantage is derived from its powerful brand, cultivated over eight decades. As the quintessential luxury car, Ferrari commands high prices and maintains exclusivity with long wait lists. With an average ROIC of 19.7% since 2016, Ferrari outshines competitors.
Watsco (WSO) - Watsco dominates the fragmented HVAC industry, leveraging cost efficiency and robust distribution. Its scale enables strong manufacturer relationships and rapid service. Exclusive rights to distribute premium Carrier products in 30 states further strengthen its competitive edge.
Robert Half International (RHI) - Robert Half excels in a competitive industry, navigating economic cycles skillfully. Its robust moat thrives in a tech-driven job market, delivering consistent returns. This has more cyclicality than most of the ‘wonderful’ companies that I’ve profiled. For this reason, I think the stock is best purchased when the job market is weak.
Henry Schein (HSIC) - Henry Schein's moat is built on its scale, extensive distribution network, and strong relationships with medical and dental supply purchasers. With a global presence, Schein achieves economies of scale and reliable deliveries. Despite potential competition, Schein's deep customer relationships and market dominance position it well.
Cintas (CTAS) - Cintas strengthens its competitive edge with efficient, low-cost operations, extensive delivery infrastructure, and strong customer relationships. Dominating the U.S. market, it serves over a million customers with 11,500 delivery routes and 461 facilities. With a 20% operating margin and 95% customer retention rate, Cintas leverages its scale for continued growth, despite economic fluctuation risks.
Copart (CPRT) - Copart's moat stems from its growing platform of 750,000 members in 170 countries, creating a valuable network effect. Its strong relationships with insurance companies and extensive land holdings further strengthen its market position. Despite short-term risks from surging used car prices, Copart's long-term growth prospects remain promising.
Electronic Arts (EA) - Electronic Arts (EA) has a moat due to its intellectual property of popular video game franchises and exclusive licensing agreements. Iconic titles like Madden and FIFA foster a loyal player base. EA's strategic move into subscriptions and DLC, along with its collaborations with major brands like Disney and the NFL, reinforce its competitive edge and ensure sustained growth.
Norfolk Southern (NSC) - Class I railroads, including Norfolk Southern, have significant moats due to industry consolidation, formidable barriers to entry, and stable pricing. Rail is cost-effective for bulk goods, strengthening profitability. Norfolk Southern's growth aligns with nominal GDP. Potential government intervention poses a speculative threat, but the industry's future appears stable.
Waters Corp (WAT) - Waters' products are essential in pharmaceuticals, materials sciences, and food sciences, supported by 4,165 active patents and a strong reputation. Valuing quality over price, Waters has significant pricing power and sticky client relationships. This moat results in steady business and high returns.
Graco (GGG) - Graco's competitive advantage lies in its specialized, hard-to-replicate products crucial for various industries. Its reliable equipment and extensive catalog of nearly 63,000 products foster repeat business and strong customer relationships. With consistent operating margins and proactive growth strategies, Graco is well-positioned for sustained growth.
Old Dominion Freight Line (ODFL) - Old Dominion is North America's top LTL shipper, thanks to its dense logistics network, cost efficiency, and high-profit margins. With a 12% market share, ODFL has room for growth, expanding its service centers and shipments. While the industry is cyclical, ODFL's strong fundamentals ensure long-term growth despite potential short-term stock volatility.
Ulta Beauty (ULTA) - ULTA's moat stems from strong brand recognition, diverse product offerings, and strategic suburban locations. The salon service and Ultamate Rewards program, with 41 million members, drive customer loyalty and foot traffic. Despite online competition, ULTA's in-store experience and digital offerings provide growth opportunities, with strong growth prospects moving forward.
Walmart (WMT) - Walmart's success comes from its scale, low prices, strategic locations, and strong grocery market. Its international presence and robust brand enhance its competitive edge. However, competition from Amazon and concerns about Sam's Club limit its appeal as an investment. Despite my reservations about the current assault on the moat, I track it on my watchlist as a wonderful company, and will consider if it trades at a truly compelling valuation.
UnitedHealth (UNH) - Health insurance poses high entry barriers due to regulatory hurdles, benefiting established players like UNH. UNH's scale offers competitive premiums, cost advantages, and robust relationships with employers and governments. Leveraging extensive data, UNH optimizes healthcare solutions and is well-positioned to serve the aging population, despite potential healthcare reform risks.
Intuit (INTU) - Intuit's moat is strong due to user reliance on TurboTax and QuickBooks, with extensive data storage creating switching barriers. QuickBooks is crucial for small businesses, and TurboTax simplifies tax filing for individuals. Intuit's growth is driven by expanding adoption and user loyalty, with minimal risk from potential tax code simplification.
Public Storage (PSA) - Public Storage's competitive advantage lies in its status as the largest U.S. self-storage company, with a strong brand and extensive geographic scale. This creates high entry barriers and pricing power. The fragmented industry offers growth opportunities through acquisitions. Public Storage's organic growth and operational efficiency ensure sustained market leadership and expansion.
NVIDIA (NVDA) - NVIDIA leads the GPU industry with over 80% market share due to its exceptional products and significant R&D investment. Its dominance is bolstered by innovations in gaming, VR, AI, self-driving cars, and data centers. While growth prospects are strong, stock performance may vary due to investor sentiment and valuation concerns.
Dollar General (DG) - Dollar General excels in rural areas, achieving superior margins and returns on capital. Its significant scale and strong supplier relationships enhance its market position. Store count has grown from 8,194 in 2007 to 19,147, with future growth likely at a more moderate pace. Innovations like Popshelf and DG Fresh, along with technological adoption, showcase Dollar General's commitment to growth. With limited room for extensive expansion, the company can still generate favorable returns through dividends, share buybacks, and same-store sales growth.
Packaging Corp (PKG) - PKG maintains a competitive advantage as one of four key players in the corrugated product industry, benefiting from market consolidation and reduced competition. Superior management, strategic facility locations, and tailored customer solutions enhance profitability. PKG's growth prospects are supported by its robust geographic reach and the expanding e-commerce sector.
Home Depot (HD) - Home Depot's strong market presence and extensive scale make it highly resilient to disruption. Dominating the home improvement market alongside Lowe's, Home Depot benefits from significant brand recognition, a vast network of 2,322 stores, and strong customer loyalty. Its established relationships with professional customers further solidify its market position. With consistent same-store sales growth, Home Depot is poised for continued success.
Deere (DE) - Deere's strong brand presence and reputation make it a staple of Americana, with 67% of farmers preferring John Deere. Its extensive dealer network ensures easy purchasing and rapid repairs, crucial for productivity. Global growth, potential benefits from commodity inflation, and opportunities in construction support Deere's resilient, above-GDP growth potential.
NVR (NVR) - NVR, the 3rd largest U.S. homebuilder, controls 131,900 lots and has strong regional brands like Ryan Homes. Their scale and reputation create a durable moat. Unlike most homebuilders that buy land upfront and risk holding devalued inventory during market downturns, NVR uses Lot Purchase Agreements (LPAs), purchasing land only when ready to build. This strategy reduces risk and capital use, making NVR resilient during downturns and positioning them for long-term growth alongside increasing home demand.
Clorox (CLX) - Clorox's strong moat stems from its powerful brands and the durable consumer staples industry. These products generate consistent, predictable cash flow and high returns on capital. Clorox benefits from brand loyalty, strategic retailer relationships, and regular consumer purchases, making them recession-resistant. Continuous innovation, such as Clorox wipes and disinfecting mist, sustains growth and market presence.
PepsiCo (PEP) - PepsiCo's moat stems from its strong, ingrained household brands like Pepsi cola, Doritos, Lay's, and Quaker Oats. Its scale offers significant cost advantages and an unmatchable global distribution network. Tight supplier and retailer relationships further solidify its position. PepsiCo is poised for long-term growth, driven by global expansion and product diversification.
BorgWarner (BWA) - Supplying parts to OEMs is a moaty industry. Companies like BWA secure long-term business as OEMs design cars with specific parts. Switching suppliers would be costly and disruptive. BWA focuses on growing in the EV market and improving vehicle efficiency, despite the cyclical nature of the auto industry, making it resilient in downturns.
Valero (VLO) - Valero's moat is due to its scale and irreplaceable assets, such as refineries and pipelines. Political pressures make building new refineries difficult, further strengthening Valero's position. As the lowest cost producer with top ROIC, Valero benefits from fossil fuel demand and growing interest in renewable diesel. International expansion into markets like Mexico and Peru presents further growth opportunities.
Williams-Sonoma (WSM) - Many companies claim equal devotion to brick-and-mortar and e-commerce, but WSM excels in both. Since 2014, WSM's e-commerce revenue grew from 50% to 70% of total revenue by 2021. Known for brands like West Elm and Pottery Barn, WSM combines brand strength with a robust e-commerce presence and extensive data collection. This strategy results in superior margins and ROIC compared to competitors like Ethan Allen and Wayfair. Despite potential short-term challenges, WSM's market share growth and e-commerce focus provide a strong foundation for long-term success.
Chipotle (CMG) - Chipotle, a pioneer in the fast-casual industry, has a strong economic moat due to its brand, high-quality food, and customer loyalty. With 32 million rewards members and economies of scale, it navigated the 2016 food poisoning crisis and COVID well. Chipotle's growth potential includes expanding its U.S. locations and growing into international markets. Despite high labor costs, its ability to raise prices maintains strong returns.
O’Reilly Auto Parts - O'Reilly expands its footprint by targeting underserved markets, similar to Dollar General and Tractor Supply. Store managers have significant autonomy, fostering nimbleness. With 5,594 locations and 28 distribution centers, O'Reilly boasts strong brand recognition and pricing power. Growth prospects include expanding in Mexico and benefiting from the trend of older cars. While potential threats include Amazon and the gradual rise of electric vehicles, their immediate impact is minimal. O’Reilly is a well-established company with a solid moat. The sustained demand for auto repairs, driven by higher miles and longer car ownership, bodes well for future growth. EVs and Amazon are potential threats but unlikely to pose significant problems in the next decade. Meanwhile, per-share metrics are supercharged by their aggressive buyback program.
Adobe (ADBE) - Adobe products are industry standards, deeply embedded in companies and sustained by sticky subscriptions. Photoshop dominates image editing, and Adobe PDFs are essential for document management. The Digital Experience segment further strengthens Adobe’s relationships with businesses, enhancing its moat and supporting continued 15% growth. Disruption is unlikely in the next decade.
FactSet (FDS) - FactSet's products are embedded in many asset managers' and financial advisors' workflows, making switching costly. Competing with Bloomberg, S&P Global, and Refinitiv, FactSet focuses on niche markets, gaining market share. Despite competitive pressures, FactSet's strong cost discipline, innovation, and resilience suggest continued growth and moat strengthening over the next decade.
Starbucks (SBUX) - Starbucks has a high valuation and significant leverage, with slower growth prospects and a shift to work-from-home affecting its core business. Despite these challenges, it maintains a strong brand moat, economies of scale, and pricing power. Future growth will come from store expansion and price increases, but at a slower pace. Starbucks should trade at a more attractive multiple given these issues. I continue to track this solid business, but I demand a substantially cheap price to consider this.
Cisco Systems (CSCO) - Cisco maintains a solid moat through entrenched relationships with customers, especially in networking. Switching to a competitor is expensive and risky for IT professionals. Growth prospects align with nominal GDP, with cybersecurity driving future growth. However, missed opportunities in collaboration remain a concern, as Zoom and Teams have gained market share.
Illinois Tool Works (ITW) - ITW's operating segments boast strong moats, with sticky customer relationships and specialized products integrated into various industries. Automotive OEM, polymer and fluid, construction, and food equipment segments benefit from brand reputation, industry integration, and relationships with retailers, ensuring resilience despite cyclical nature and potential recession impacts.
Brown-Forman (BF.A) - Brown-Forman's significant moat stems from its iconic brands like Jack Daniels, deeply ingrained in American culture. The complexity of distillation and aging process makes disruption challenging. High margins, global presence, and effective marketing further solidify its position. Growth opportunities lie in international expansion and the shift from beer to spirits consumption. Brown-Forman offers two share classes: A (BF.A) with voting rights and B (BF.B) without. Despite BF.A's limited impact due to family control, the preference is for voting rights. BF.B is more liquid, but voting rights are preferred.
W.W. Grainger (GWW) - Grainger's business relies on direct sales to businesses, fostering sticky contracts and a scale-driven moat. Its extensive distribution network and product inventory make competition difficult. While Amazon Business poses a threat, Grainger has maintained its relationships. However, pressure on margins due to online price transparency is a concern. Despite my reservations, I track Grainger as a wonderful company.
Zoetis (ZTS) - Zoetis dominates the animal pharmaceutical market with strong margins, driven by pricing power and expense discipline. Patent protection and brand recognition create a formidable moat. With a robust pipeline and economies of scale, Zoetis is poised for continued growth in the expanding global pet market. Rising global pet ownership, fueled by growing middle-class incomes, sees pets treated as family members, spurring higher spending on medical care. Unlike human medicines, animal pharmaceuticals face fewer price regulations, boosting industry profitability.
Taiwan Semiconductor Manufacturing (TSM) - TSM's moat stems from technical prowess and strong ties with semiconductor manufacturers. Renowned for making advanced chips cost-effectively, TSM dominates the market. Tight relationships, like with Apple, secure its position. With growing demand for chips, especially in automotive and AI, TSM's future seems robust despite cyclical trends.
S&P Global (SPGI) - SPGI's businesses, including the S&P 500 and ratings agencies, boast formidable moats. Essential to financial markets, they ensure long-term relevance and profitability. With steady global financial system growth, any downturns, like during recessions, are temporary blips in SPGI's long-term growth prospects.
General Dynamics (GD) - General Dynamics, a defense contractor with over a century of history, has produced iconic military assets like the M1 Abrams tank and the original F-16 fighter jet. With the US government as their primary customer, secured by long-term contracts, they maintain a stable position. Ongoing maintenance of the US arsenal ensures consistent business, fortified by enduring contracts like the Columbia class submarine.
Monster Beverage (MNST) - Monster is the pioneer of energy drinks, controlling 40% of the market with its highly addictive blend. Strong brand loyalty and wide availability in convenience stores fortify its moat. Legislative threats are minimal due to cultural acceptance, akin to tobacco. With addictive properties and growing demand, Monster's sales and international presence are poised for continued expansion.
Charles Schwab (SCHW) - Charles Schwab is the dominant online broker, solidifies its dominance with the TD Ameritrade merger. Its scale enables cost-cutting and competitive fee offerings. Schwab's reputation and services position it for continued growth, though interest rate fluctuations remain a concern.
Estée Lauder (EL) - EL's moat stems from its strong brand portfolio, particularly in the beauty industry where brand loyalty is robust. International sales, especially in Asia-Pacific, are key for growth. Relationships with retailers and distributors are vital, though department store decline poses a challenge. EL's adaptability and resilience were evident during COVID, distinguishing it from competitors like Revlon.
McCormick (MKC) - McCormick's moat stems from its ubiquitous brand presence in grocery stores, where spices generate high profits. Its small portion of household spending allows for premium pricing and high margins. With a recession-resistant business and a global leadership position, it's poised for continued growth, especially in emerging markets.
Nike (NKE) - Nike's moat lies in its iconic brand, allowing premium pricing and consistent high margins. Unlike competitors like Under Armour, Nike maintains its dominance. With international expansion and increasing direct online sales, its growth prospects remains strong, bolstered by recurring sales and improving margins.
Apple (AAPL) - Apple's moat is built on its locked-in ecosystem, high-quality products, and control over app distribution. Its 55% market share in smartphones ensures app developers must work with Apple, solidifying its position. With persistently high margins and limited antitrust enforcement, Apple's moat appears formidable, barring significant technological shifts or regulatory changes.
Dominos Pizza (DPZ) - Domino’s possesses a robust moat driven by its consistent brand, strong franchisee relationships, and efficient scale. With a dominant presence nationwide, it maintains a significant cost advantage. Competitors face substantial hurdles to challenge its market leadership. Growth prospects, both domestically and internationally, appear promising, surpassing nominal GDP.
Microsoft (MSFT) - Microsoft dominates the software market, deeply ingrained in offices and households worldwide. Its suite of products, from Office to Windows and cloud services, forms the backbone of many businesses. Switching away entails significant costs and disruptions, solidifying Microsoft's position as an essential component of the global economy.
Unilever (UL) - Unilever is a wonderful business with exceptional economics that has been mismanaged in recent years. I am interested in owning at a compelling price. Unilever's moat lies in its iconic brands, occupying essential shelf space in grocery and pharmacy stores worldwide. While susceptible to disruption, Unilever can acquire smaller trendy brands. Pricing power enables them to maintain margins and pass on costs. Growth has been stagnant, but restructuring and expansion into emerging markets offer potential.
Cummins (CMI) - Cummins boasts a robust moat built on its strong brand, entrenched relationships with manufacturers, and reputation for engineering excellence. The company's ability to adapt to clean energy initiatives, such as hydrogen fuel cells, positions it well for future growth amid rising demand for trucks and environmental sustainability.
Alphabet (GOOGL) - Google's search supremacy is unparalleled. Google is literally a verb for search. Competitors like Bing have failed to dent its dominance. Enhanced by user dependence and extensive data collection, Google boasts one of the strongest moats globally. YouTube's rapid growth suggests it may redefine traditional television. Overall, Google stands as a formidable company with an unparalleled moat.
Snap-On (SNA) - Snap-on's moat stems from its reputation for crafting premium, durable tools, valued by professionals for decades. Unlike cheaper alternatives, Snap-on tools are known for longevity, backed by a lifetime warranty. Direct customer relationships through franchises fortify their moat. Expansion into emerging markets promises future growth.
Meta (META) - Facebook's moats, fortified by its 4 billion global users across platforms like Facebook, Instagram, WhatsApp, and Messenger, seem insurmountable. Users' deep integration renders alternative networks futile. Despite slower growth, Facebook's strong margins and returns hint at a solid investment prospect, even with modest growth.
Waste Management (WM) - Waste Management's moat lies in their landfills, which are limited by regulations and public sentiment. With civilization generating constant trash, landfills remain essential. WM's vast network of landfills ensures a competitive advantage. Growth prospects are tied to nominal GDP and acquisitions, making valuation critical for investors.
Church & Dwight (CHD) - Church & Dwight, with a 175-year legacy, manufactures household staples like Arm & Hammer baking soda, Trojan condoms, and Oxiclean. These recognized brands boast high margins and shelf space in retail outlets, ensuring enduring demand. With consistent revenue and profit growth, they maintain strong returns on capital.
Fastenal (FAST) - Fastenal, established in 1967, specializes in industrial supplies like screws and safety gear. It's primarily a distributor, with products sourced from diverse manufacturers. With 15 distribution centers and over 2,000 branches, it's a convenient one-stop shop for businesses, boasting strong financial performance and consistent growth.
Paychex (PAYX) - Paychex's moat stems from its crucial role in managing payroll complexities for small businesses. Its tight relationships with clients make switching to competitors daunting. Paychex's comprehensive services, including payroll, benefits, and HR support, offer convenience and reliability. Despite competitors, its dominance in this niche is likely to endure.
Hershey (HSY) - Hershey's strong moat lies in its ubiquitous presence and nostalgic appeal. Established brands like Hershey bars and Reese's cups dominate store shelves, leveraging consumer familiarity and fond childhood memories. While health concerns pose a threat, candy consumption remains robust, suggesting continued growth prospects, potentially extending to international markets.
Costco (COST) - Costco's moat is fortified by customer loyalty and vast scale, driving cheap, high-quality offerings. Customers, drawn by deals, gradually increase spending, with average sales per warehouse rising. Membership fosters loyalty, while Costco's profitability improves, indicating a strengthening moat over time.
AO Smith (AOS) - AO Smith's moat is built on its renowned brand, especially in the water heater market where it holds substantial market share. With strong retailer relationships and compliance with stringent energy standards, new entrants find it challenging to compete. Future growth is expected, driven by housing expansion and international markets like China and India.
Expeditors International of Washington (EXPD) - Expeditors International is a logistics powerhouse, renting cargo space globally and ensuring smooth, hassle-free deliveries for clients. With a network of offices worldwide, it commands significant market share and offers a suite of services including air and ocean freight, customs brokerage, and warehousing. Its asset-light model, strong returns, and global reach create a formidable moat against competitors. As global trade expands, Expeditors is poised for continued growth.
Lockheed (LMT) - Lockheed Martin, a defense contractor, dominates the industry with its formidable moat and high returns on capital. With a vast majority of its revenue originating from the US government, it operates across four segments: Aeronautics, Missiles & Fire Control, Rotary & Mission Systems, and Space. The F-35 fighter jet and innovative technologies like compact fusion drive growth. Defense spending trends and geopolitical tensions, particularly with China, provide a favorable outlook. The industry's essential role in national security ensures Lockheed's resilience, with minimal disruption potential.
Tractor Supply (TSCO) - Tractor Supply (TSCO) specializes in serving rural customers with a wide range of products, operating over 2,000 stores across the US. Its niche focus and strategic store placement give it pricing power and a competitive edge against larger retailers like Home Depot and Lowe's. TSCO's strong margins and returns on capital are likely to persist, supported by its unique market position. The potential trend of people moving to rural areas could further boost TSCO's growth prospects.
Sherwin Williams (SHW) - Sherwin Williams (SHW) boasts impressive financials with strong returns on capital and consistent growth. Operating since 1866, it operates over 5,000 stores offering paints, coatings, and industrial products. Revenue streams come from consumer brands, the Americas group, and performance coatings. Its resilience in housing market downturns and strong contractor relationships contribute to its formidable moat.
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Beautiful list!