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S&P: high margins and an even higher moat

The ratings and business data intelligence group shows no sign of standing still
December 9, 2021
  • S&P commands significant pricing power
  • Superior returns on capital to Moody’s   

To outsiders, the hierarchy of firms on Wall Street can sometimes seem very alien. For example, there should be no discernible difference in the business models of the top ratings agencies, and yet a rating from Moody’s carries more weight in the eyes of investors than either Standard & Poor’s or Fitch. Moody’s can even point to a large shareholding from Berkshire Hathaway as evidence of its gold-plated status.

Following 'the Sage' in this case does not look like an unwise bet, given the agency is one of just 19 stocks to make our screen. But S&P Global (US:SPGI) is just ahead on our criteria. With a wide (and growing) range of products from credit ratings to market data services, it also offers canny stock-picking investors the opportunity to buy quality at a reasonable price.

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