Trends with Benefits #89: Finding Economic Moats with Morningstar’s Erin Lash and Damien Conover
November 22, 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).
Follow Ed Lopez @thatEdLopez on Twitter.
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IMPORTANT DISCLOSURES
Please note that VanEck may offer investments products that invest in the asset class(es) or industries included in this video.
The views and opinions expressed are those of the speaker and are current as of the video’s posting date, and are not necessarily those of VanEck or its employees. Video commentaries are general in nature and should not be construed as investment advice. References to specific securities and their issuers or sectors are for illustrative purposes only. This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data.
Investing in cryptocurrencies comes with a number of risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. There is no assurance that a person who accepts a cryptocurrency as payment today will continue to do so in the future.
Investments in commodities can be very volatile and direct investment in these markets can be very risky, especially for inexperienced investors.
There are inherent risks with equity investing. These risks include, but are not limited to stock market, manager, or investment style. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices.
There are inherent risks with fixed income investing. These risks may include interest rate, call, credit, market, inflation, government policy, liquidity, or junk bond. When interest rates rise, bond prices fall. This risk is heightened with investments in longer duration fixed-income securities and during periods when prevailing interest rates are low or negative.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.
No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Van Eck Associates Corporation.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
Van Eck Associates Corporation
666 Third Avenue, New York, NY 10017
IMPORTANT DISCLOSURES
Please note that VanEck may offer investments products that invest in the asset class(es) or industries included in this video.
The views and opinions expressed are those of the speaker and are current as of the video’s posting date, and are not necessarily those of VanEck or its employees. Video commentaries are general in nature and should not be construed as investment advice. References to specific securities and their issuers or sectors are for illustrative purposes only. This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data.
Investing in cryptocurrencies comes with a number of risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. There is no assurance that a person who accepts a cryptocurrency as payment today will continue to do so in the future.
Investments in commodities can be very volatile and direct investment in these markets can be very risky, especially for inexperienced investors.
There are inherent risks with equity investing. These risks include, but are not limited to stock market, manager, or investment style. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices.
There are inherent risks with fixed income investing. These risks may include interest rate, call, credit, market, inflation, government policy, liquidity, or junk bond. When interest rates rise, bond prices fall. This risk is heightened with investments in longer duration fixed-income securities and during periods when prevailing interest rates are low or negative.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.
No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Van Eck Associates Corporation.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
Van Eck Associates Corporation
666 Third Avenue, New York, NY 10017