Planting an Idea for 2013
Value investors always like to refer in investing in good or great businesses. But what does good or great actually mean? Rather than speculate, Warren Buffett, who is perhaps the best investor in the world, has defined high-quality businesses through his words and investment over his 60-plus year career. Buffett likes to refer to competitive advantage, or that set of characteristics that set a business or industry apart from the competition. For example, Coca-Cola (KO) fits the bill. Payment network providers Visa V and MasterCard (MC) also qualify as high-quality business due to the recurring revenue streams created by their near duopoly in credit market. Another form of competitive advantage includes being a low-cost provider: Think GEICO insurance and Wal-Mart (WMT).
One industry that I also believe possesses durable competitive advantages is the fertilizer industry, which has underperformed in 2012. The long-term prospects for fertilizer demand look very bright. Investors who buy these stocks during cyclical dips are likely to do well over time....435 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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