On a Pricing Power Trip!
As investors rummage for riches in these crowded financial markets, every stock offers a different pitch! 50 years of market history, however, show one attribute for a company that investors seem to love more than any other. We’re talking about pricing power!
Aside from contrarians eyeing unlikely turnarounds, nobody invests in dead-end companies. The world is going somewhere, fast, and investors want to lead from the front with their stock picks. Growth is the holy grail, but growth has a price. To become bigger and better, Apple needs to take its 13-billion-dollars of annual net income and drive it straight back into hiring more staff, developing new gizmos, opening new stores, and advertising new products. That’s what CEO Tim Cook is paid for. Apple’s biggest bet is in itself, and hopefully, investors will be better off for it!
Amid a hundred years of market mayhem, there’s no denying that certain companies have outshone. Disney, Nike, Coca-Cola, Visa, VeriSign, Berkshire Hathaway, and Philip Morris, all continue growing to a bursting point. Weirdly, however, none reinvest their entire profit-haul!
On closer inspection, their products are so popular that the growth comes free! This is called pricing power. Americans love Disney enough to pay an extra few cents every year for their Mouse House experience, and Disney is happy to oblige. It can enforce its right to what it deserves, meaning investors stay buoyant of inflation, outperform during market downturns, even enjoy a growing dividend!
So, great companies, great products, great customers, and great returns. If you can catch a world-beater on the rise and hold tight through the highs and lows, the franklins will surely flow your way eventually!