By Jason Fittler
We like to anchor our investment choices on both absolute quality and value.
1300SMILES is a high quality business measured on an absolute basis which we are seeking to own within our clients portfolios.
1300SMILES possession of a strong dominant and durable competitive advantage in the form of its brand name, supply chain and services are still in question as to its depth over competitors.
We consider a durable and dominant competitive advantage to be an extremely important factor when choosing to purchase one business versus another. Non-physical assets are hard to replicate by potential competitors and allow businesses who possess them to earn high sustainable returns on both assets and equity.
Whilst the services 1300SMILES offers are easily replicated by other dentistry practices, based on our research we believe the economic moat lies with 1300SMILES’ distribution network and supply chain which affords the business to earn the envious margins that it does. Out of the dozens of dentistry practices we have spoken with, none earn the margins that 1300SMILES does.
1300SMILES has been an outstanding business for many years as evidenced by the quality ratios we employ in our analysis here at Grow Your Wealth.
We expect this business to maintain its high quality rating.
We do however monitor all of our businesses closely for signs of their competitive advantage decreasing.
1300SMILES estimated intrinsic value is expected to increase by over 12% per year for the next three years up to $4.85 in 2014.
For more information on 1300SMILES Limited (ONT) please contact us on 07 4771 4577.