Moat
Definition · Level 9 · Valuation
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A durable competitive advantage — brand, network effects, switching costs, scale or patents — that keeps returns on capital high for years despite competition.
Example
“Nobody rips out their ERP system — the switching costs are the protection.”
Where Tradecraft teaches it
Level 9 · Valuation, in the lesson “Investing styles and sell-side vocabulary”: Growth vs value, quality, moats, cyclicals vs defensives, ratings, targets and re-ratings.
Related terms
- Cyclical vs defensiveSectors whose earnings swing with the economy (autos, airlines, semis, materials) versus those with steady demand through recessions (staples…
- Growth vs valueInvesting styles: paying high multiples for fast growers whose worth lies in far-future cash flows, versus buying low-P/E, low-P/B or high-yield…
- InitiationAn analyst’s (or bank’s) first published rating and target on a stock, typically with a long in-depth report.
- Multiple expansion / compressionThe market paying more or less per dollar of earnings (P/E up or down), independent of earnings growth; also called a re-rating or de-rating.
- Overweight / outperformBuy-equivalent sell-side ratings: the analyst expects the stock to beat its sector or the market.
- Price targetAn analyst’s estimate of where the stock should trade, usually over 12 months, published with the rating and backed by a multiple or a DCF.