Investing legend Warren Buffett usually talks about his love for companies with “moats” — companies than can maintain aggressive benefits over a protracted time period. And traders are questioning if medical scrubs maker Figs (NYSE:FIGS) has a moat for its fast-growing enterprise.
On this video from Motley Idiot Backstage Go, recorded on Nov. 1, Idiot contributor Danny Vena talks with Idiot contributor Jason Corridor about how Figs could not have a moat per se. However its model is nicely cherished and it is a first mover, which may give it an edge over different attire firms.
Jason Corridor: There’s a few questions right here for you, Danny.
Danny Vena: Positive. I will begin with the Idiot Fan’s query associated to The Rank present a number of weeks again. Truly I feel that was most likely the IPO and SPAC present the place I spoke about Figs.
Figs is an organization that makes scrubs for medical professionals, and Idiot Fan desires to know “what is the moat? Any attire firm can eat their lunch. No firm has completed it to this point, however can do it. Ideas.”
My ideas are that there was a possibility for any person to enhance on the present scrubs for many years and no person did. When Figs got here alongside they usually made scrubs out of fabric that was not scratchy, that was extra form-fitting, that had enjoyable colours and textures and nonetheless did the job that you simply want scrubs to do. They’ve a really loyal fan base that is rising.
Sure, I feel there is a chance for somebody to eat into that house, however I do not suppose there’s going to be one winner and I feel scrubs has the first-mover benefit.
Corridor: I do not suppose it is a type of factor that your typical apparel company is actually excited about going into. It would not match inside their retail technique. It isn’t a part of their model and inside. It would not make sense. You must go discover any person to make the shut. You are taking up time in your manufacturing facility for issues that you simply already know methods to make. Yeah I agree with you Danny.
Vena: A few of the different scrubs producers at the moment are attempting to repeat what Figs did. However for my part, it is too little, too late.
This text represents the opinion of the author, who could disagree with the “official” suggestion place of a Motley Idiot premium advisory service. We’re motley! Questioning an investing thesis — even one among our personal — helps us all suppose critically about investing and make selections that assist us develop into smarter, happier, and richer.