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What ASX stocks would the Romans have bought?

O tempora! O mores!  – exclaimed the great Roman statesman and orator, Cicero, in exasperation at the declining standards of public civility in Roman life.

Roughly translated as Oh the times! Oh the values! – could a stock-picking Cicero also utter this complaint in reference to the apparent high valuations of Australian equities at the moment?

If so where’s the value to build his investing empire? And how might his famous knowledge of the classical languages help him identify the best stocks to buy now? Let’s take a look and some key terminology and stocks to match.

The Monopoly

The Romans built straight roads as they were largely oblivious to the possibilities of air travel, but Sydney Airport Limited (ASX: SYD) and Transurban Group (ASX: TCL) are two stocks that are instructive of the benefits of monopoly like advantages.

While the Romans may have introduced the idea of toll roads, Transurban’s modern versions continue to benefit from higher traffic volumes and higher fees to use them as drivers often have no realistic alternative but to travel on them.

It’s also likely the Romans had more fearsome toll-dodging punishments than Transurban’s letter in the post, but there’s generally no escaping the toll road charges and it’s inconceivable that any company would undertake the expense required in an attempt to build rival toll roads.

Sydney Airport enjoys monopoly like advantages in shuttling international and domestic travellers into and out of New South Wales. As a monopoly it also has pricing power to charge more for aeronautical and non-aeronautical fee-earning services like car parking and rent payable by its retail tenants. In effect, airlines and passengers have little choice but to pay up if they want to use the airport’s services.

The Oligopoly

An oligopoly is a market form dominated by very few sellers, these are rare to find in the capitalist system and even rarer to find in the lucrative healthcare space.

However, the specialist nature of CSL Limited’s (ASX: CSL) products means it has attained this status as rivals find it hard to compete with its best-in-class products and innovative excellence. Its share price has climbed around 120% over the last five years as its life-saving medicines and blood plasma products continue to see strong sales into the hospitals and surgeries of healthcare markets around the world.

The Duopoly

Woolworths Limited (ASX: WOW) and the operator of Coles supermarkets, Wesfarmers Ltd (ASX: WES), show how two operators can exist to divide and conquer the Australian grocery market. Their sheer scale means even the most well financed rivals are unlikely to ever take significant market share from these two power players. While most empires rise and fall, Woolworths and Wesfarmers look set to rise and rise.

The Triumvirate

There aren’t many ruling coalitions of three on the ASX as yet, but the online property advertising sector offers up the most likely candidates. First up is Rea Group Limited (ASX: REA) as the operator of Australia’s most popular online real estate website realestate.com.au.

Then there’s domain.com owned and operated by Fairfax Media Limited (ASX: FXJ), but is there room for a third powerful player in this space? Onthehouse Holdings Ltd  (ASX: OTH) is an online rival with innovative differences that may see it muscle market share away some from its bigger rivals soon enough. If so at current prices around 51 cents it may be one of the best speculative buys available on the ASX right now.

Rome Wasn’t Built in a Day

While the above businesses could certainly lay the foundations for a happy retirement, it’s important to remember the importance of planning and forward thinking when it comes to long-term wealth creation.

That’s why the smart money heads towards stocks building a big future before others in the market catch on!

Therfore you might want to take the time to read up on The Motley Fool’s lesser known pick of one more company building a brilliant future. If you’re interested it’s FREE and you’ll be emailed the investment case right away. 

Motley Fool contributor Tom Richardson owns shares in Sydney Airport and Onthehouse. You can provide feedback on Twitter @tommyr345

 

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