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Zacks Value Trader Highlights: Netflix, United Rentals, NVIDIA, Cintas and Valero Energy
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For Immediate Release
Chicago, IL – April 22, 2024 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: https://www.zacks.com/stock/news/2258606/how-to-find-stocks-with-moats)
How to Find Stocks with Moats
Welcome to Episode #366 of the Value Investor Podcast.
(0:30) - Finding Strong Investments With A Competitive Edge In Their Industries
(4:45) - Top Stock Picks With Moats: Tracey’s Watchlist
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
This week, Tracey is looking at companies that have moats.
Warren Buffett has talked about moats many times over the years. He loves companies that have one.
What is a Moat?
A moat is literally what it says. It is a wide ditch that surrounds a castle or a town which provides protection in case of an attack.
In the case of companies, it's when the company has some kind of competitive advantage in its industry that others cannot overcome. That company can pull up the drawbridge, so to speak.
But there are several ways to get to moat status. A company can get a moat by being "first in" in a new industry or product. But it will eventually lose its competitive advantage. Think of Apple and the iPhone. It had a moat, initially, in 2007 but that didn't last long.
A company can also get a moat by being so big it can behave in a particular way when its competitors cannot. Amazon, for example, is one of the few companies that can afford to grow a network of distribution centers across the globe.
How Can You Find Moat Stocks?
There really is not a screen for a moat stock. You mostly know them when you see them.
Netflix has had two moats in its lifespan. The first was the little red envelope in which it used to send out DVDs to customers. It was the first in mailing DVDs on a big scale.
Netflix's second moat was the streaming service. It was also first in on that. Netflix is trading at 35x forward earnings. It's not cheap on a classic value basis.
Does Netflix still have its moat after a half a dozen other streaming services have entered the game?
United Rentals is the largest equipment rental company in the world. If that's not a moat, I don't know what is.
Shares of United Rentals hit new highs earlier in the year, but have fallen 7.4% in the last month. United Rentals is cheap, with a forward P/E of 14.8. Investors also get a dividend, yielding 1%.
Should investors look outside of technology to a company like United Rentals to find moats?
Valero Energy is the largest independent refiner in the United States. It owns 15 refineries in the United States, Canada and the United Kingdom. Valero Energy has a market cap of $53 billion.
Valero is cheap, with a forward P/E of 9.6. It pays a dividend, currently yielding 2.6%.
There hasn't been a new refinery built in the United States in decades and refineries are billion-dollar facilities. It take a lot of cash to build one.
Does Valero have a moat thanks to the high costs of entry?
What Else Do You Need to Know About Moats?
Tune into this week's podcast to find out.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Value Trader Highlights: Netflix, United Rentals, NVIDIA, Cintas and Valero Energy
For Immediate Release
Chicago, IL – April 22, 2024 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: https://www.zacks.com/stock/news/2258606/how-to-find-stocks-with-moats )
How to Find Stocks with Moats
Welcome to Episode #366 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
This week, Tracey is looking at companies that have moats.
Warren Buffett has talked about moats many times over the years. He loves companies that have one.
What is a Moat?
A moat is literally what it says. It is a wide ditch that surrounds a castle or a town which provides protection in case of an attack.
In the case of companies, it's when the company has some kind of competitive advantage in its industry that others cannot overcome. That company can pull up the drawbridge, so to speak.
But there are several ways to get to moat status. A company can get a moat by being "first in" in a new industry or product. But it will eventually lose its competitive advantage. Think of Apple and the iPhone. It had a moat, initially, in 2007 but that didn't last long.
A company can also get a moat by being so big it can behave in a particular way when its competitors cannot. Amazon, for example, is one of the few companies that can afford to grow a network of distribution centers across the globe.
How Can You Find Moat Stocks?
There really is not a screen for a moat stock. You mostly know them when you see them.
1. Netflix (NFLX - Free Report)
Netflix has had two moats in its lifespan. The first was the little red envelope in which it used to send out DVDs to customers. It was the first in mailing DVDs on a big scale.
Netflix's second moat was the streaming service. It was also first in on that. Netflix is trading at 35x forward earnings. It's not cheap on a classic value basis.
Does Netflix still have its moat after a half a dozen other streaming services have entered the game?
2. United Rentals, Inc. (URI - Free Report)
United Rentals is the largest equipment rental company in the world. If that's not a moat, I don't know what is.
Shares of United Rentals hit new highs earlier in the year, but have fallen 7.4% in the last month. United Rentals is cheap, with a forward P/E of 14.8. Investors also get a dividend, yielding 1%.
Should investors look outside of technology to a company like United Rentals to find moats?
3. NVIDIA Corp. (NVDA - Free Report)
NVIDIA is one of the largest producers of chips for AI. For now. NVIDIA is also one of the top companies in gaming chips.
Analysts are bullish. NVIDIA's sales are expected to rise 73.8% this year and earnings are forecast to jump 84%.
Does NVIDIA have a first-in advantage on AI which gives it moat status?
4. Cintas Corp. (CTAS - Free Report)
Cintas makes uniforms and other items businesses need to get ready for the work day. Cintas is a large cap company with a market cap of $67.2 billion.
Shares have been on a tear the last 5 years, gaining 210% versus the S&P 500 at just 72.5%. But it's not cheap. Cintas trades with a high P/E of 44.8.
Does Cintas have a moat in the uniform business?
5. Valero Energy Corp. (VLO - Free Report)
Valero Energy is the largest independent refiner in the United States. It owns 15 refineries in the United States, Canada and the United Kingdom. Valero Energy has a market cap of $53 billion.
Valero is cheap, with a forward P/E of 9.6. It pays a dividend, currently yielding 2.6%.
There hasn't been a new refinery built in the United States in decades and refineries are billion-dollar facilities. It take a lot of cash to build one.
Does Valero have a moat thanks to the high costs of entry?
What Else Do You Need to Know About Moats?
Tune into this week's podcast to find out.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.