Seeking Small-Cap Moats: Sun Hydraulics
Sun Hydraulics is--by just about any definition--a high-quality company that has a profitable niche focus, a likely economic moat, and a strong management team, says Morningstar’s Todd Wenning.
When I came up with the idea for this monthly series, one company stood out in my mind as embodying all the characteristics of a high-quality small cap that possesses an economic moat. It's also a company that I've followed and owned for a number of years now. At the risk of playing favorites and "talking up my book," then, I wanted to highlight a few other small caps in this series before I discussed this one.
Before we jump into this month's small cap, however, I want to clarify what I mean by a "quality" company--a term that's often used in equity research but is rarely defined. Depending on who is making the case, quality can be limited to just meaning a good balance sheet or consistent free cash flow generation, but there's more to it than any single factor.
Todd Wenning does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.