Real-Time Quote
US News
Page 1 of 8 | Next Page
Show Entire Article

7 Stocks With Big Gains, Downside Protection
The Street | February 14, 2012 | 01:18 PM EST

If you’re still in a defensive investing posture after last year’s stomach-churning market, it’s time to consider buying the stocks of companies with impregnable market-leading positions.

Ratings firm Morningstar refers to them as “wide moat” companies.

A “wide moat,” essentially, means a company has a distinct and sustainable competitive advantage over its peers that could protect its business in the event of a recession or a even a shift in the direction of its industry.

The width of a company’s moat is a result of a number of variables, including its size, brand-name strength, unique technologies, and the difficulty its customers may have in switching to a competitor’s products.

Those types of characteristics help keep a company and its cash flow stable in a difficult economy.

And Morningstar says that “companies that have generated returns on capital higher than their cost of capital for many years running usually have a moat, especially if their returns on capital have been rising or are fairly stable.”

Morningstar found seven wide-moat companies with share-price returns ranging from 10 percent to 36 percent this year, a period in which the S&P 500 index jumped 7 percent.

Page 1 of 8 | Next Page
Show Entire Article
Real-Time Quote
omniture pixel