When small is beautiful

When small is beautiful

Elephants don’t gallop, so investors may be better off seeking out opportunities among small companies with market niches that can be grown quickly from a lower base. But beware the entry route

Scale economies in large parts of the industrial, consumer and services sectors are usually essential for sustaining competitive advantage. That’s why, in value terms, the world’s main stock markets are dominated by companies with sectoral and/or global scale, and why most Irish investors focus on the few larger Irish-quoted companies that are well known to them and source their earnings from several markets: the likes of CRH in building materials; Smurfit Kappa in packaging; Ryanair, in low-cost pan-European air travel, and Diageo, owner of Guinness, in global spirits and alcoholic beverages.

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