Industry comparison
Hello,
Was wondering if I could get your opinion on the following question. Given the same size, earnings, market share, etc. which company would you prefer to invest in? Insurance company, refinery, shipping company, real estate REIT Is there a source where I can learn about each of these and rank them?
Thanks!
Shipping or REIT.
Insurance companies are subject to so much regulation and competition that I can only see margins getting squeezed. That and the fact that at any one time they have nowhere near enough capital to cover potential losses.
Refineries are entirely dependent upon oil supply and prices. Oil prices are affected by far too much and the supply is only going to go down.
Shipping could be good. International transport will always be needed, they can carry an insane amount of cargo and I can't see it being very cyclical. Only concerns are pirates and fuel prices.
REITs are definitely good. Yes property prices fluctuate and go up and down, but increasing populations and constant available land = increased land prices over the long run. They own hard, tangible assets so regardless of any other corporate activity, they have a ton of assets just sitting there. My only concern would be the leverage of some companies, 40-60% LTV is seen as standard.
Thanks for your reply Is there a rule of thumb to use? For example, if EBITDA margins are the same for all the companies, wouldn't the company from an industry with the thinnest margins be a great pick?
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