Three businesses to purchase right now with substantial economic moats

A company's future profits may be supported by an economic moat

Here, three stocks are chosen for immediate purchase by Edinburgh Investment Trust portfolio manager Imran Sattar.

Edinburgh Investment Trust seeks to provide an alluring long-term total return that includes both capital growth and income. As a result, Edinburgh is able to achieve its goals of growing its dividend more quickly than UK inflation and surpassing the total return on the FTSE All-Share index.

We look for businesses with long-lasting competitive advantages, or deep economic moats, that support appealing future returns. The procedure is adaptable, and the kinds of investments held are not restricted to growth, value, or recovery stocks. 43 stocks make up the portfolio, which is highly diversified both thematically and economically.

A number of the investment-trust structure's characteristics are also advantageous to shareholders. For instance, the company's long-term debt should increase long-term returns because it accounts for 9% of gross assets. In order to benefit from the slight share-price discount to net asset value (NAV) and raise the NAV per share for the remaining shareholders, it is also repurchasing its shares. The three holdings that follow show how our investment process creates appealing investment opportunities.

For income and capital growth, three businesses have economic moats.

Rightmove (LSE: RMV) is a resilient business undergoing transition. It gains from the network effect, whereby more users (consumers) bring more clients (real estate brokers) to the website. Estate agents have little choice but to use the website since they spend 85% of their time on all property portals in the UK; otherwise, properties run the risk of not being viewed. Rightmove's economic moat is thus well-established.

To maintain their strength, moats do require investment, though. In order to ensure a strong internal infrastructure and to help the company capitalize on advancements in the field of artificial intelligence, Rightmove is witnessing an acceleration of investment and a short-term impact on margins. The management team is obviously considering the future and setting up the company for the best chance of sustained success in a shifting AI landscape and competitive environment.

Oxford Instruments (LSE: OXIG) is a medium-sized scientific instruments company that is listed in the UK. Oxford Instruments began in its co-founder Martin Wood's garden shed and became Oxford University's first commercial spin-out. High-end scientific equipment is sold by the company to the semiconductor, materials-analysis, healthcare, and life sciences industries. With strong and increasing margins, returns on capital, and cash conversion, the group should be able to increase sales at a rate of between five and eight percent annually in the medium term. The firm's deep moat can be explained by strong scientific knowledge.

Finally, Howdens (LSE: HWDN), the market leader in kitchens in Britain, serves as an example of how scale can create a strong economic moat. The direct customers of Howdens are installers and builders. Because it manufactures the majority of its kitchen and new growth area products in-house, including fitted wardrobes, it has control over costs and quality, making its offering dependable and highly competitive.

With a nationwide network of 900 depots, Howdens also oversees its own logistics operation, guaranteeing the proximity of its trade clients. For its trade clients, the group's economic moat of scale leads to cheaper prices, better products, quicker delivery times, and more dependability and convenience. With this business model, Howdens currently controls 40% of the UK kitchen market, and we believe there is still room for growth in the years to come.