To kick off the new year, let’s take a step into the “Way Back Machine.” We won’t get carried away with ourselves and go too far back (long New Year’s Eve night and all that)—only ten years to the January 1st start to 2004.
At that point in time, you were looking to make an investment with $25,000. Maybe you inherited it, maybe it was a bonus, maybe you sold an asset or business, or maybe you put together the money through some good old-fashioned saving.
As you come across some potential investment ideas, you decide to take a hard look at Colgate-Palmolive. Everyone knows how lucrative toothpaste, soap, and other toiletries are. The company slaps brand names on its goods like Ajax, Irish Spring, Hill’s, Soft Soaps, Fab, and of course, Colgate and Palmolive, and it is able to achieve 36.0% returns on total capital because of the price that people like us are willing to pay when we walk through Wal-Mart and pick out our deodorants, soaps, and toothpastes off the shelves. The company has earned its brand name recognition that has allowed it to occupy shelf space in the bathrooms of most Americans: you may not think of toothpaste as an innovative industry, but Colgate is currently breaking ground on an anti-cavity toothpaste that uses remineralization techniques to neutralize the sugar deposits in teeth and be 4x as effective as the typical fluoride.