The S&P/ASX 200 Index (ASX: XJO) has recovered from a sizeable decline at the open and is pushing higher. At the time of writing the benchmark index is up 0.35% to 6,166.5 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Flight Centre Travel Group Ltd (ASX: FLT) share price is down just over 2% to $17.12. This is despite there being no news out of the travel company today. However, prior to today, its shares were up over 55% since this time last month. I suspect that some investors have decided to take a bit of profit off the table today.

The Smartgroup Corporation Ltd (ASX: SIQ) share price has fallen 4.5% to $6.67. This morning the salary packaging and fleet management company released its annual general meeting presentation. This presentation included its guidance for the first half. According to the release, first half net profit is expected to be $32 million. This will be a decline of 21% from its profit of $40.5 million in the prior corresponding period.

The Woodside Petroleum Limited (ASX: WPL) share price is down 2% to $24.16. This decline appears to have been driven by a pullback in oil prices today. According to CNBC, the WTI crude oil price is down 1.5% to US$38.38 a barrel. This could have been driven by a warning by Goldman Sachs that a 20% oil price correction might already be underway.

The Worley Ltd (ASX: WOR) share price is down almost 5% to $10.14. This follows the release of its Investor Day presentation this morning. Within the presentation management advised that it has postponed all non-essential capital expenditure. One broker that remains positive is Credit Suisse. On Tuesday it upgraded the company’s shares to an outperform rating with a $10.50 price target.

More reading

• Afterpay share price overbought says analyst
• The smartest ASX shares to invest $10,000 in right now
• These ASX shares could defy the market sell-off this morning
• Is the Woodside Petroleum share price cheap today?
• ASX 200 jumps 2.4%, unloved shares keep rising

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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One of the best investing books I think you can read is Pat Dorsey’s The Little Book That Builds Wealth.

The book is an excellent guide for identifying businesses with robust economic moats or competitive advantages. Economic moats surround many of the best-performing companies in the world. Companies like Apple (NASDAQ: AAPL) and Xero Limited (ASX: XRO). Companies that we wish we had discovered a decade ago! 

Why you should own businesses with economic moats

In his book, Dorsey explains how economic moats protect companies from the fierce attack of competitors to help them to earn above-average returns on the cash they invest:

“Just as moats around medieval castles kept the opposition at bay, economic moats protect the high returns on capital.”

If a company has less competition it can charge a higher price for its products and spend less money on marketing. Now, imagine owning a portfolio full of companies like this, earning high returns year-in, year-out. What impact could that have on your wealth?

What are intangible asset moats?

One important economic moat which can be difficult to spot is the intangible asset moat.

Intangible assets are things like brands, patents and regulatory licenses which cannot be easily matched by competitors. These can create what Dorsey calls, ‘mini monopolies’. They prevent competitors from making and selling the same products and provides the company with pricing power.

3 companies with strong intangible asset moats

Blood product company CSL Limited (ASX: CSL) is an example of a company with a strong intangible asset moat. Through research and development, as well as acquisitions, CSL holds the rights to produce and sell lifesaving medicines and immunotherapies.

These rights aren’t impenetrable. Patents can be challenged and have a finite life. However, because CSL has a diverse portfolio of products, rather than relying on a single product, the moat is far more robust.

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) is another company supported by a moat of patents. The Fisher & Paykel Healthcare share price has surged over 300% in the last 5 years and the respiratory device manufacturer has been known to battle with rival ResMed Inc (ASX: RMD) over patent infringement.

If patents are the moat around the castle, regulatory licencing is the crocodile swimming in the waters. Regulatory licencing increases the barrier to entry for healthcare companies like CSL. It does this by requiring products to get regulatory approval for sale, but with no restriction on what price products can be sold for.

Finally, milk product company A2 Milk Company Ltd (ASX: A2M) is an example of a company with a growing brand for which customers are willing to pay a premium. Along with an impressive supply chain, the a2 milk brand is very hard for competitors to replicate.

Foolish takeaway

Although intangible assets are hard to see, they can create valuable economic moats that help us to build wealth. A great way to test if an intangible asset gives a company true protection is to ask, “does it give the company pricing power and is it sustainable?”

More reading

• Why CSL, Harvey Norman, IPH, & Saracen shares are charging higher
• 3 top ASX shares for growth, income, and value investors to buy today
• 5 things to watch on the ASX 200 on Wednesday
• How to become a millionaire before your parents with ASX shares
• Why the CSL share price continues to trail the ASX 200

Regan Pearson owns shares of A2 Milk and Xero.

You can follow him on Twitter @Regan_Invests.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Xero. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) has fought back from a sharp decline to edge higher. At the time of writing the benchmark index is up slightly to 6,145 points.

Four shares that are climbing more than most today are listed below. Here’s why they are charging higher:

The CSL Limited (ASX: CSL) share price has pushed 3% higher to $287.15. This morning analysts at Goldman Sachs reiterated their buy rating and $336.00 price target on this biotherapeutics company’s shares. This follows the announcement that CSL is taking up its option to acquire Vitaeris. The clinical-stage biotechnology company is currently focused on the phase 3 development of a treatment for rejection in solid organ kidney transplant patients.

The Harvey Norman Holdings Limited (ASX: HVN) share price has jumped 4.5% higher to $3.72 after the release of a sales update. Although its international operations have been a bit mixed due to forced closures during the pandemic, Harvey Norman’s local operations have delivered very strong growth. Another positive is that the board has declared a special dividend of 6 cents per share. This will be paid to shareholders later this month.

The IPH Ltd (ASX: IPH) share price is up 4% to $7.54 after announcing an acquisition. The company’s AJ Park subsidiary has agreed to acquire New Zealand intellectual property firm Baldwins Intellectual Property. It will be paying approximately NZ$7.9 million, including deferred consideration of NZ$0.4 million. Baldwins’ FY 2020 EBITDA after normalisation adjustments for partner salaries was approximately NZ$2 million.

The Saracen Mineral Holdings Limited (ASX: SAR) share price has surged 9% higher to $4.62. This follows a rebound in the gold price overnight ahead of the U.S. Federal Reserve’s June meeting this week. It isn’t just Saracen on the rise today. The S&P/ASX All Ordinaries Gold index is up a sizeable 2.5% at the time of writing.

More reading

• 3 companies with great intangible asset moats
• ASX winners and losers from last week’s rally
• Harvey Norman share price flat on sales update and special dividend announcement
• Why the CSL share price continues to trail the ASX 200
• ASX 200 jumps 2.4%, unloved shares keep rising

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why CSL, Harvey Norman, IPH, & Saracen shares are charging higher appeared first on Motley Fool Australia.

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