In 1989, Peter Lynch referred to Colgate-Palmolive as a stalwart stock, and quipped: “How much can you expect to squeeze out of Colgate-Palmolive? You aren’t going to become a millionaire off it. . .unless there is some startling new development you would have heard about by now. With the stalwarts you have to consider taking profits more readily.”
Incidentally, the beginning of January 2014 marked the moment when a $20,000 investment in Colgate-Palmolive would have become worth over $1,000,000 had it been purchased at the moment when Lynch said that in the summer of 1989.
With blue-chip stocks, there is this constant underestimation that the glory days are over because there is simply nowhere else to go. This kind of logic ignores the potential for acquisitions, technology gains/productivity gains, price increases at rates greater than inflation, and enduring buyback programs with the excess free cash flow.
With the Coca-Colas, Johnson … Read the rest of this article!