Much of what we do as investors involves studying businesses and critically evaluating the returns that are likely based on management’s competitive strategy. The elusive search for true “moats” is often frustrated by quick technological change which can make yesterday’s incumbent firm today’s dinosaur. Investors who pay a rich valuation for a business with a moat must be confident that the advantages leading to high returns today are not destroyed by new types of competition in the near term. Smart phones may soon threaten to drive retailers without a coherent competitive strategy to extinction.
Tractor Supply Company is a specialty retailer with a well defined niche market catering to the lifestyle needs of recreational farmers and ranchers. The company offers an array of products required in the daily life of those who live in rural communities. While discretionary durable goods are a significant portion of revenues, the company also offers non-discretionary consumable products that attract recurring business. Read this article for a company profile.
The blogosphere and bookshelves everywhere are full of prescriptions for how to succeed in various endeavors. When it comes to business and investing, there is much useful information available along with a fair amount of nonsense. Unfortunately, most guides for success in business and investing are almost certain to fail for those who do not have the necessary life experiences to leverage the knowledge. In addition, sometimes, it is easier to have a guide for what to avoid. Read this article for more details.