- Specialist connectivity has an important future.
- Our other company is cheap but maybe for good reason.
Our first company this week is a star with a bright future providing essential infrastructure for the next part of the digital age – it’s well worth watching for entry points. The second business by contrast is very cheap due to a legal issue. The effect of that specific problem should prove temporary, but there are other underlying problems for the business.
When looking for long-term investments, one of the best strategies is to look for companies that do something that not many other companies do.
A business with some form of competitive edge can often charge its customers prices which generate very high levels of profitability – as long as the customer accepts the value on offer. Combine this with the ability to sell products into a growing market and you have the makings of a long-term winner that can compound in value over many years.
Our first company this week is one such business.
Shares in our second business look very cheap as a result of litigation uncertainty, but the valuation may also accurately reflect a business where low rates of growth and weakening price competitiveness are a major problem.
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