Exploring optionalities by investing in companies which look for continual expansion of TAM
A framework which I follow while looking into companies wherein managements regularly look for expanding their TAM by moving to business adjacent to their core wherein they have demonstrated excellence
Investing in such business is akin to buying a call option for growth in a new segment
Some names which I have invested in based on above thesis
Take PI Industries, a leader in Agri Chemicals, now expanding into the CDMO space, tapping into an adjacent industry with huge potential.
Godrej Agrovet, through Astec Life Sciences, is similarly venturing into the CDMO sector, moving beyond its established agrochemical business to explore new growth opportunities.
IEX, initially focused on energy exchange, is broadening its TAM by entering gas, coal, and carbon credits exchanges, all of which are closely related to its core expertise.
And let’s not forget Eureka Forbes, traditionally known for water purifiers, which is now expanding into adjacent markets with air purifiers and robo vacuum cleaners, further enhancing its presence in the health and home automation space.
These companies demonstrate how expanding into adjacent areas not only sustains growth but also presents investors with an optionality into new markets, adding layers of potential upside. 🚀
Readers let me know your thoughts on any other similar business you have come across