Another Investment Rarity
On August 8th, we noted how Royal Gold has become an “investment rarity.” The unique gold company was one of the few stocks to hold steady during the recent selling panic.
Today, we feature another rarity… one confirms our idea that if you want to make a fortune in developing markets like China and Indonesia, it’s best to stick with the “basics.” It’s best to own dominant global companies that sell things like soda, cigarettes, and fuel. “Boring” products like these enjoy steady, unrelenting demand… And there’s scant risk some new technology will make having a beer after work obsolete. Well-run companies in these industries generate steady cash flow and big dividends.
One of the “basics” leaders we’ve featured many times is Phillip Morris International (NYSE: PM). A longtime recommendation of our colleague Dan Ferris, PM is the international offshoot of U.S. cigarette powerhouse Altria, which makes it the largest international vendor of cigarettes in the world… and a direct play on the world’s growing middle class, much of which is in Asia.
As you can see from our one-year chart of PM, selling the basics isn’t just a good offense that produces gains… It’s also a good defense. While stocks of all types have crashed to multi-year lows in the past month, PM has held like a rock. We state once again: Selling the basics ain’t pretty, but it works.