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What does the superstar company phenomenon mean?

Superstar companies – typically in control of their markets and pricing, often at the forefront of innovation and frequently eager to expand – represent both opportunities and threats when it comes to investing.

Their often solid profitability and their ability to protect this can make them attractive propositions.

Their dominance, however, can undermine suppliers and labour markets and their pricing power can jeopardise competition, both at the consumer and at the antitrust level.

Check out our infographic on superstar pricing power as a challenge for policymakers and investors:

Superstar Infographic

Also read: Investing in superstars and Are companies about shareholder or stakeholder value?

This article appeared in The Intelligence Report – 1 October 2019

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Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients.

The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay.

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