These 5 stocks have unique competitive edge and room to run

stocks to run hiher

Key Points

  • Techs including Applied Materials, ServiceNow and Microsoft are expected to continue growing fast due to demand for AI applications.
  • Analysts see upside for Charles Schwab stock, which is forming a bullish price consolidation.
  • Cheniere Energy is the leading liquid natural gas producer and explorer; Wall street expects triple-digit earnings growth this year. 
  • 5 stocks we like better than Amazon.com

A prominent investment theme of the past year is the outperformance of profitable companies with a unique competitive advantage.

Obvious examples of stocks in that category include Nvidia Corp. NASDAQ: NVDA, which dominates the market for AI chips, and Salesforce Inc. NYSE: CRM, whose user-friendly interface and ease of customization have made it the leader in enterprise data management.

Lesser-known stocks also fit the bill.

For example, International Flavors and Fragrances NYSE: IFF is a key supplier to the markets including food and beverage, personal care, and health and wellness. The S&P 500 is a market share leader in its industry. 

The VanEck Morningstar Wide Moat ETF BATS: MOAT tracks, the Morningstar Wide Moat Focus Index of attractively priced companies with sustainable competitive advantages. 

In other words, it’s comprised of stocks “At the intersection of quality and value,” according to Ioannis Pontikis, a senior equity analyst at Morningstar.

Here are a handful of stocks that meet that criteria: 

Applied Materials, Inc. NASDAQ: AMAT

Shares of the chip gear maker vaulted 6.35% on February 16 after the company delivered better-than-expected first-quarter earnings, driven by fast-growing demand for AI chips. 

In a statement, Applied Materials CEO Gary Dickerson said, "Our leadership positions at key semiconductor inflections support continued outperformance as customers ramp next-generation chip technologies critical to AI and IoT over the next several years."


The company also guided higher for the current quarter.

Applied Materials analyst forecasts show nine analysts boosting their price targets on the stock. 

Cheniere Energy, Inc. NYSE: LNG

Cheniere Energy analyst forecasts show a price target of $198.70, an upside of 23.90%, and a consensus view of “buy.” 

The company is a leading liquefied natural gas producer and exporter globally. It  develops and operates a wide network of LNG terminals and pipelines. 

Despite forecasts for growing demand, Cheniere stock is down 5.80% this year, even as analysts see triple-digit earnings growth this year. The Cheniere energy dividend yield is 1.08% and the company increased its shareholder payout for the past two years. 

Charles Schwab Corporation NYSE: SCHW

In its most recent quarter the brokerage and asset management giant reported a 36% decline in net income, to 68 cents per share, although as you see using MarketBeat’s Schwab earnings data, that still came in ahead of views.

Revenue fell by 29% due to higher interest expenses, although that was offset by higher revenue from asset management and administration fees. The market rally in the fourth quarter of 2023 was largely responsible for those revenue increases. 

The Schwab chart shows the stock forming a bullish consolidation below a December 15 high of $71.50, Schwab analyst forecasts show a price target of $69.69, an upside of 8.22%.

ServiceNow, Inc. NYSE: NOW

With a three-month return of 17.28 %, and with its stock trading just below an all-time high, the cloud-based workflow specialist doesn’t appear to be undervalued.

However, ServiceNow stock has more room to run, based on its stellar track record of earnings and revenue growth.

Wall Street is expecting ServiceNow earnings to decline in 2024 as subscription revenue slows. 

However, the company has a partnership with Nvidia to develop AI capabilities to speed workflow processes, and it also collaborates with Amazon Inc. NASDAQ: AMZN Web services to offer the ServiceNow platform to AWS customers.

Microsoft Corporation NASDAQ: MSFT

Investors don’t generally think of the top-weighted component in the S&P 500 as being undervalued, but as with ServiceNow, analysts see more upside for Microsoft.

Like other technology stocks, Microsoft has been rallying as it’s become a leading artificial intelligence company, due in part to its early investment in OpenAI. That gives Microsoft a unique competitive advantage versus companies with a later start in the AI sweepstakes.

Wall Street expects Microsoft earnings to grow by 19% this year and by another 15% in 2025, which is exceptionally strong for a mature, well-established company. 

Should you invest $1,000 in Amazon.com right now?

Before you consider Amazon.com, you'll want to hear this.

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While Amazon.com currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Amazon.com (AMZN)
4.8284 of 5 stars
$177.23+1.5%N/A61.11Buy$202.80
Applied Materials (AMAT)
4.5708 of 5 stars
$189.46-0.2%0.68%22.29Moderate Buy$201.50
Cheniere Energy (LNG)
3.0646 of 5 stars
$160.56-0.9%1.08%3.96Moderate Buy$192.56
Microsoft (MSFT)
4.5965 of 5 stars
$400.96+0.5%0.75%36.25Moderate Buy$434.05
ServiceNow (NOW)
4.6028 of 5 stars
$722.57+1.2%N/A85.92Moderate Buy$780.37
Charles Schwab (SCHW)
4.6024 of 5 stars
$74.26+1.1%1.35%31.07Hold$74.47
VanEck Morningstar Wide Moat ETF (MOAT)N/A$84.96+0.8%N/A27.67N/AN/A
NVIDIA (NVDA)
4.9263 of 5 stars
$795.18+4.4%0.02%66.60Moderate Buy$940.30
International Flavors & Fragrances (IFF)
3.2726 of 5 stars
$84.89+1.1%1.88%-8.46Hold$86.35
Salesforce (CRM)
4.9213 of 5 stars
$273.83+1.3%0.15%65.20Moderate Buy$310.61
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

  • stalterkate@gmail.com

Contributing Author

Retirement, Asset Allocation, and Tax Strategies

Experience

Kate Stalter has been a contributing writer for MarketBeat since 2021.

Additional Experience

Series 65-licensed investment advisor, financial advisor, Blue Marlin Advisors; investment columnist for Forbes, U.S. News & World Report

Areas of Expertise

Asset allocation, technical and fundamental analysis, retirement strategies, income generation, risk management, sector and industry analysis

Education

Bachelor of Arts, Saint Mary’s College, Notre Dame, Indiana; Master of Business Adminstration, Kellogg School of Management at Northwestern University

Past Experience

Founder, financial advisor for Better Money Decisions; editor, stock trading instructor for Investor’s Business Daily; columnist, podcast host, video host for MoneyShow.com; contributor for Morningstar magazine


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