Unlocking Hidden Gems in the Software Space
In the realm of do-it-yourself tax filing, two giants stand out: H&R Block, Inc. (NYSE:HRB) and Intuit Inc. (INTU). While TurboTax has become a household name, HRB is often overlooked. However, this underdog presents an intriguing opportunity for investors seeking high-quality businesses in the software space.
Competitive Advantage
H&R Block’s competitive positioning is rooted in its hybrid model, which combines the benefits of DIY tax filing with the expertise of human tax professionals. This unique approach has allowed HRB to maintain a loyal customer base, while also attracting new users seeking a more personalized experience.
The Quest for Quality
As an investor, I’m drawn to businesses with sustainable long-term competitive advantages. H&R Block’s hybrid model, coupled with its extensive network of physical locations, provides a formidable barrier to entry for potential competitors. This moat, combined with the company’s commitment to innovation, makes HRB an attractive play in the software space.
Expert Insights
As a former strategy consultant with experience in brand and intangible assets valuation, I’ve had the privilege of working with global brands in the technology, telecom, and banking sectors. My expertise has taught me to seek out reasonably priced businesses with superior competitive positioning and high dividend yields.
A Deeper Dive
If you’re interested in gaining access to my highest conviction ideas in the software space, consider subscribing to The Roundabout Investor. This exclusive service offers in-depth market analysis, factor investing insights, and a watchlist of higher risk-reward investment opportunities.
Disclosure
The author has no stock, option, or similar derivative position in any of the companies mentioned and has no plans to initiate any such positions within the next 72 hours. This article expresses the author’s own opinions and is not receiving compensation for it (other than from Seeking Alpha).
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