Coho Capital Gushes Over 5 Stocks With Unassailable Moats, Significant Earnings Growth

Coho Capital also likes Alphabet Inc (NASDAQ:GOOG), noting that the company’s Google division is ‘one of the most relied upon utilities in the world, with over three billion searches a day. According to NetMarketShare.com, Google has a 78% share of global desktop search and over 90% share in mobile search’. Coho also likes Alphabet’s  YouTube division, which reaches more millennials than any single cable network. Given its huge cash pile, Alphabet is very affordable, trading for around 17x 2017 estimated earnings. 126 elite funds were long Alphabet Inc (NASDAQ:GOOG) at the end of December, down 8 funds from the previous quarter.

Apart from Alphabet’s Google, Coho Capital views Visa Inc (NYSE:V)‘s business model as the best that the fund has seen. To Coho Capital, Visa ‘is essentially a royalty on global spending’ and is ‘the ultimate network effects business, with retailers dependent upon the vendor with the most users (billions of Visa cards issued) and users wedded to the vendor with the most points of purchase (over 44 million merchants)’. Coho thinks that Wall Street isn’t properly modeling Visa’s opportunity for more pricing power in Europe and that the stock could have more upside. 111 top funds had a bullish position in Visa Inc (NYSE:V) as of the most recent 13-F reporting period, down 4 funds from the previous quarter.

Last but not least, Coho Capital notes that S&P Global Inc (NYSE:SPGI) and Moody’s are basically a ‘government sanctioned duopoly with each company controlling 40% of the market for credit ratings’. To Coho, the credit ratings business is very attractive given the recurring revenues, high margins, and strong pricing power. Coho thinks there are a number of upside earnings drivers for the credit ratings industry over the next half decade as over $2 trillion of annual debt needs to be refinanced and as emerging markets (particularly India) increase their presence in the debt market. The number of elite funds with holdings in S&P Global Inc (NYSE:SPGI) rose by 9 quarter-over-quarter to 50 at the end of December.

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