McCormick And Sysco: Two Companies Quietly Making You Rich

Most of the time, my writings on this site focus on companies with excellent brand names that have a history of creating great wealth for their owners. There’s a reason for that: people will always be willing to pay more money for Colgate toothpaste than a generic store version (and that price differential is what creates shareholder wealth), and companies with brand-name protection generally don’t get crushed by inept management because the brands generally sell themselves (thus making companies with strong brands a strong ideal for those interested in intergenerational wealth transfers).

Of course, there are a lot of ways to make money in this country, and there are companies that, while they don’t have a brand-name product to sell, they do occupy a nice very well and create sustainable long-term profits for their owners.

Two such examples are McCormick and Sysco.

McCormick seems about as unsexy as a business … Read the rest of this article!

Lindt & Spruengli Stock: The Conservative, High-Growth Investment

Lately, I’ve been thinking about the role that depreciation, terminal values, and ongoing capital expenditures play in affecting investment returns. With most assets, the value lies in something physical that deteriorates/depreciates over time. If you buy a rental property and rent it out to a tenant, the IRS gives you a 27.5 useful life for the property according to the schedule. If you don’t replace the roof, remodel the kitchen, fix the foundation cracks, or get the termite treatment, you won’t be able to charge much for rent in 2047, if there is even a house left at all at that point.

In the context of investing, it stands to reason, the worst businesses are those that perpetually require additional capital to maintain its cash-generating capabilities, and the best businesses are those that continue to throw off cash with minimal capital investments or even manage to grow in value on … Read the rest of this article!