Durable Competitive Advantage

Durable Competitive Advantage

Durable Competitive Advantage Jonathan Poland

The most important aspect of durability is market fit. Unique super simple products or services that does change much if at all over time and that do not need continuous investment to stay relevant are always better than the opposite. In some industries this is impossible to do. How to spot these kind of businesses? Here are some core traits to look out for.

  • Consistent Growth in Sales
  • Consistent Growth in Earnings
  • Consistent Growth in Book Value
  • Low Debt to Income Ratio (> 5)
  • High Return on Equity Average (+12%)
  • Low Operating Costs to Income (> 75%)
  • Low CapEx to Income (> 75%)
  • High Gross Profit Margins (+ 25%)

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