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"The second company is a company called Baker Hughes. Baker Hughes is an oil and gas equipment and service company exposed to a competitive advantage called process know-how. They help oil majors punch holes in the ground and optimize reserves, building a core competency that takes years for competitors to replicate. As that competency reinforces itself, the return on assets continues to rise. Right now, the market misunderstands these process know-how businesses and is pricing in profitability decline, which makes the stock really cheap."
Rob Spivey explains that Baker Hughes has developed a strong competitive moat with its specialized process know-how in servicing oil majors. Despite cyclical pressures, its compounding return on assets and undervalued pricing suggest a promising long-term value play.
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