Trends with Benefits #89: Finding Economic Moats with Morningstar’s Erin Lash and Damien Conover

22 November 2022

Listen Time 36:02 MIN

 

On this episode of Trends with Benefits, I meet with Morningstar’s Erin Lash, Director of Consumer Equity Research, and Damien Conover, Director of Healthcare Equity Research. We discuss the characteristics of their covered sectors, what they look for when assessing competitive advantages and valuations, and their outlook for companies across both sectors.

Key competitive advantages, or economic moats, can differ depending on the sector. For instance, within consumer products, intangible assets are important due to the relationship between brands and pricing power, as well as the strength of companies’ retail partnerships, which may influence shelf space and their ability to negotiate. For the healthcare sector, intangible assets commonly refer to patents, which create exclusivity and strong pricing power. Another essential factor in healthcare is switching costs, which are related to the learning curves of various products.

Erin highlights companies in the consumer space that are well-positioned for a potential recession and those that offer attractive dividends to investors. We explore the resiliency of consumers in the face of cost pressures and rising interest rates.

Damien outlines the innovators within biopharma and which company he believes may lead the wave of innovation in neurology. Additionally, we discuss the future of mRNA technology.


Show Notes:

01:26 Characterization of the Consumer Product Sector

03:10 Characterization of the Healthcare Sector

05:57 Morningstar’s Approach to Moat Analysis

09:43 Sources of Economic Moat

15:13 Attractive Companies in Consumer Products

26:23 Innovative Healthcare Companies

32:14 Long-term Trend

Trend or Fad

Listen for Erin and Damien’s take on “buy now, pay later,” spinoffs, alternative protein, and tech and retail names entering healthcare (33:16).

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