I pay close attention to consumer brands for the following reason:
“The best stocks to buy create a product that nobody else can legally produce then delivers that product using super-efficient distribution channels. This results in hard-to-replicate economies of scale. The product is protected by trademarks, patents, and copyrights, allowing the company to price higher than it otherwise could, accelerating the virtuous cycle as it generates higher free cash flow that can then be used for advertising, marketing, rebates, and promotions. Most people don’t reach for the knockoff Hershey bar or Coca-Cola bottle. They want the real thing, with the price differential being small enough there is no utility trade-off on a per-transaction basis.”
The disproportionate amount of wealth that got created for American investors over the past hundred years have come from the pharmaceutical, tobacco, oil, beverage, … Read the rest of this article!