Must-See Chart: Profit from “Basics”

 

If there’s one point we hope we’ve driven home this year, it’s how well “owning the basics” works in a tough market… or any market.

Regular DailyWealth readers have read about our “basics” idea dozens of times. The idea is, for long-term investors – especially folks who want exposure to the growing economies of Asia, Africa, and Latin America – boring, basic, dividend-paying companies are the way to go. These companies sell things like soda, cigarettes, beer, and Band-Aids. It’s in the “basics” business that you can find companies with powerful brand names producing huge and predictable cash flows. After all, no new gadget is going to make having a beer after work obsolete.

#-ad_banner-#Just after the August panic, we highlighted how many of our favorite “basic” stocks sailed through the crisis with minimal share price damage. They simply kept selling their products every day and kept paying rising dividends. And just this week, several have staged major upside breakouts.

For an example of this price strength, we note McDonald’s… a stock our colleague Tom Dyson pegged as an ultimate “recession-proof” company years ago. McDonald’s isn’t inventing the next smartphone or social network. It simply sells burgers and pays dividends. And as you can see, this strategy is working. McDonald’s just hit a fresh 52-week high.