I am a firm believer in tangible infrastructures.
If a company is in a business model of creating a physical product, that can deliver a certain function that is hard for its competitors to replicate, then this company is worth spending time to study it deeper.
On the flip side, companies that create physical products or infrastructures are usually asset intensive to a certain extent. They usually have a lower profit margin as well.
What’s even worse, is an asset-intensive company delivers a product or service with little no to competitive advantage over its peers.
Telcos and property development companies come to mind.
However, on the other end of the spectrum, is where we see examples of companies selling tangible products and are yet still very profitable. Apple is an example since it’s still a hardware-dominant company. TSMC, a company that spent billions in capital expenditures building new foundries, is a company that commands an above-average profit margin....