Wide-moat stocks are companies with strong and sustainable advantages that protect them from competition. Their competitive advantages ensure long-term profitability and make these companies sound investments.
There are many ways for a business to build a wide moat. Some wide-moat companies have recognizable brands that attract customers or allow them to charge premium prices. A company can build an economic moat if it's able to reduce its fixed costs lower than its competitors. Regulatory barriers can also provide a moat by preventing other companies from entering a market.
Best wide-moat stocks
Best wide-moat stocks in 2025
Here are the five best wide-moat stocks and the competitive advantages they have.
| Name and ticker | Current price | Market cap |
|---|---|---|
| Visa (NYSE:V) | $362.36 | $691 billion |
| Adobe (NASDAQ:ADBE) | $404.67 | $170 billion |
| Fair Isaac (NYSE:FICO) | $2,184.72 | $52 billion |
| ASML (NASDAQ:ASML) | $757.96 | $302 billion |
| Costco Wholesale (NASDAQ:COST) | $1,010.25 | $440 billion |
1. Visa
Here's a quick way to get an idea of the economic moat that Visa (V 1.65%) has. Grab your wallet, pull out your credit and debit cards, and see how many have the word "Visa" printed on them.
Visa isn't the only payment network, but it's the largest and most widely accepted, along with rival Mastercard (MA 1.55%). There are 4.3 billion Visa payment cards worldwide, enough for more than half the population of the planet to carry a Visa card.
The key to Visa's business is its worldwide acceptance. Almost all businesses that accept payment cards accept Visa. In its 2024 fiscal year, Visa processed 233.8 billion transactions for $13.2 trillion in payments volume. Visa gets a percentage of every transaction, and in 2024, it made $19.7 billion in net income. That was a 14% year-over-year increase.
2. Adobe
Software company Adobe (ADBE 1.3%) has an impressive portfolio of products for creative design, document management, and marketing. Some of its most notable products include:
- Photoshop for image editing and design.
- Premier Pro for video editing and creation.
- Adobe Acrobat for viewing and editing PDFs, and Adobe Acrobat Sign for e-signatures.
These are all widely used and highly recognizable products. Photoshop may not be the only image editing software, but it's the first one that comes to mind for most people. Adobe is also constantly innovating. In recent years, it has been incorporating artificial intelligence (AI) tools into its product line.
For its 2024 fiscal year, Adobe reported $19.1 billion in gross profit, a 12% increase from the prior year. With the strength of its products and its AI upgrades, Adobe still has plenty of room to grow going forward.
3. Fair Isaac Corporation
Fair Isaac Corporation (FICO 2.77%), or FICO for short, is an analytics company that develops credit scoring models. It's the company behind the FICO® Score model, which is the industry standard for lending decisions. While there are other types of credit scores out there, 90% of top lenders use FICO® Scores.
FICO charges financial institutions for its credit scores, and it has dozens of different types of scores to serve different markets. There are FICO® Scores for credit card companies, auto lenders, and mortgage lenders. It also has subscription plans consumers can purchase to stay on top of their credit.
The fact that FICO® Score is the default score option is a significant competitive moat that has helped it increase profits over the years. It reported net income of $512.8 billion in its 2024 fiscal year, a 19% year-over-year increase.
4. ASML
Semiconductors are an essential component of much of the technology we use every day, including computers and smartphones. ASML (ASML -1.42%) manufactures lithography systems, a key part of semiconductor production. Companies use lithography systems to etch patterns onto the wafers of their semiconductor chips.
The most advanced chips, including top AI chips, require extreme ultraviolet (EUV) lithography. The production of an EUV lithography system is a massive undertaking, and there's currently only one company that does it -- ASML. Its EUV lithography systems sell for hundreds of millions of dollars, and it has a backlog of orders. Customers include Taiwan Semiconductor Manufacturing (NASDAQ:TSM) and Intel (INTC 0.12%).
ASML is a Dutch company, and it reported 7.6 billion euros in net income in 2024. That was a slight decrease from 7.8 billion euros in 2023. However, the semiconductor industry is expected to grow to $1 trillion by 2030, so demand for ASML's products will continue to grow.
In all likelihood, ASML will continue to be the only company making EUV lithography systems for at least several years. While that may seem like more of a narrow moat, ASML is already partnered with some of the top tech companies, and its EUV systems are highly advanced. It will take a substantial investment of time and money for any competitors to cut into its market share.
5. Costco
Warehouse club Costco (COST 1.89%) has a few big advantages over other retailers. For starters, it has more than 130 million members who pay an annual fee to shop at its stores. They tend to be loyal, too -- renewal rates normally top 90%. Unlike other stores, Costco doesn't carry a huge variety of products. Warehouses carry about 4,000 stock-keeping units (SKUs), compared to about 30,000 at most supermarkets and 140,000 at a typical Walmart (WMT -0.36%).
Because Costco makes so much money from memberships, it can accept much lower profit margins than most retailers. Its relatively small selection of products also gives it more negotiating power with suppliers. Suppliers know that their products will have less competition at Costco and that shoppers trust Costco to stock only high-quality products.
Costco's negotiating power also comes into play with its payment processing fees. Most major U.S. retailers accept credit cards from any payment network. Costco only accepts Visa. In return for this exclusivity, Costco pays much lower processing fees to Visa than other merchants.
For its 2024 fiscal year, Costco reported $7.4 billion in net income, a 17% increase from what it made in 2023.
Related investing topics
Should I invest?
Should I invest in wide-moat stocks?
Wide-moat stocks are some of the most reliable long-term investments. Since these are profitable businesses, they have funds to invest in expansion, which is good for growth. They can also return money to shareholders in the form of dividends or stock buybacks.
These stocks also tend to be resilient during market fluctuations. They're established companies with strong customer bases, giving them more protection in economic downturns. They're not immune to a bear market, but they're well-equipped to handle it.
Another way to invest in these businesses is through exchange-traded funds (ETFs) with wide-moat stocks. One option is the VanEck Morningstar Wide Moat ETF (MOAT 0.76%), which invests in companies with moats expected to last 20 years or longer. Whether you go with an ETF or your own hand-picked list of wide-moat stocks, these companies are worth having in your portfolio.
FAQ
FAQ
How do you identify wide-moat stocks?
To identify wide-moat stocks, look for businesses with powerful competitive advantages that will help them maintain and grow their market share. There are many types of moats, including lower supply costs than competitors, intangible assets, and a highly regarded brand. Make sure to review a company's financial statements, as wide-moat stocks are normally profitable businesses.
Are wide-moat stocks always a safe bet?
Wide-moat stocks tend to be less risky than other stocks, but that doesn't mean they're always safe. A company with a wide moat could have issues that lead to subpar returns. For example, management could make poor business decisions, or it could lose some of its competitive advantages.
What are some examples of wide-moat stocks?
Visa, Adobe, FICO, ASML, and Costco are all examples of wide-moat stocks. Each of them has competitive advantages over other companies in their respective industries, and they're all profitable.
What makes a stock’s 'moat' wide or narrow?
The length of time a competitive advantage is expected to last determines if a stock's moat is wide or narrow. A wide moat means that a company should be able to maintain its competitive advantage for at least 20 years, according to Morningstar. A narrow moat means that it should be able to maintain its competitive advantage for at least 10 years.
How do I invest in wide-moat stocks?
You can invest in wide-moat stocks by picking businesses yourself based on their fundamentals or by buying shares in a wide-moat ETF. An ETF is faster and easier, but picking wide-moat companies yourself gives you more control over your portfolio.
