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.
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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