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Australian wide moat Stock: Brambles Ltd

Brambles (ASX: BXB) has  two ways to describe itself. On one hand,  it’s “a supply-chain logistics company operating in more than  60 countries, primarily through  the CHEP brand.”  Translated: it’s widely known for making pallets  and crates. On the other hand,  its platforms form the “invisible backbone of global supply chains, primarily serving  the fast-moving consumer goods, fresh produce, beverage, retail and general manufacturing industries. The world’s largest brands trust Brambles to help them transport life’s essentials more efficiently, safely and sustainable.”

Therein lies the core  of its moaty  nature. Brambles has  a pallet- pooling network,  which delivers a cost  advantage as more customers join. “The majority of products moved  on CHEP pallets  are non-discretionary items,”  notes Morningstar analyst Grant Slade.  “Therefore,  Brambles’  volumes aren’t materially affected during periods of subdued economic conditions.”

Brambles was the first mover in the North American  market, with CHEP USA and its pallet pooling network  entering  the US in 1990.  It now has  about 40 per cent  market  share. While in Europe, Brambles estimates its share of the European pallet market  at 28 per cent.

Brambles is a two-star stock  with a PE ratio of 8.57. It has  a forecast partially franked  dividend  yield of 2.58 per cent.


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