Buying businesses with demonstrable competitive advantages over peers is an investing strategy that tends to work well over the long run. That's because companies with competitive advantages often possess pricing power, which helps grow their sales and earnings over time.

With a market capitalization of $9.5 billion, a comparison between Floor & Decor (NYSE: FND) and the likes of Home Depot and Lowe's might remind you of the story of David and Goliath. But while its peers may have a size advantage, the hard-surface flooring retailer shows that size isn't everything. Let's elaborate on what I mean.

In just 23 years in business, Floor & Decor has built itself into an unstoppable specialist within the massive home improvement retail industry. Larger generalist peers typically only allocate a few aisles of store space to hard-surface flooring. This leaves consumers with just a fraction of the options that they would otherwise have at Floor & Decor. That's because the company dedicates the entirety of its average store space of 79,000 square feet to selling more than 4,000 natural stone, vinyl, tile, wood, and laminate flooring products.

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Source Fool.com