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Tracking Moat Trends Yields Superior Returns

By Daniel Sparks - Apr 23, 2013 at 1:35PM

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Tracking these trends had proven to be an excellent indicator of stock performance.

In mid-2009, Morningstar introduced what it calls "moat trend ratings." Moat trend ratings can be either positive or negative. A positive moat trend indicates that a company's competitive position in strengthening. Conversely, a negative moat trend indicates that it is weakening. These moat trends have been an excellent indicator of stock performance.

In the video below, Fool contributor Daniel Sparks discusses the importance of these ratings and he suggests one way investors can identify positive and negative moat trends. To illustrate, Daniel takes a look at Apple (AAPL 4.08%), Whole Foods (WFM), and Nokia (NOK 0.98%).

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$149.64 (4.08%) $5.86
Nokia Corporation Stock Quote
Nokia Corporation
NOK
$5.14 (0.98%) $0.05
Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
COST
$470.76 (1.24%) $5.77
Whole Foods Market, Inc. Stock Quote
Whole Foods Market, Inc.
WFM

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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