The dilemmas of leading companies and valuation premiums

Leading companies enjoy higher valuation multiples due to their outstanding market positions, often holding significant market share and strong brand recognition. Investors generally believe that these factors can translate into higher revenue growth and stability. Additionally, leading companies often possess enduring competitive advantages—such as patents, franchises, and robust supply chain management—that create a so-called "moat," allowing them to maintain high profitability over the long term. However, in today's rapidly changing business cycles, there is indeed room for debate regarding whether leading companies can sustain premium valuations over time.

Further Reading: https://bit.ly/3AeVA3i