Being a value vulture, I like food, beverages, and snacks. Everyone likes 'em. Everyone eats 'em. As I sit here with my 100 calorie snack bag of Doritos, you can go to the bank that, even though these companies have their cycles, that buying into them is buying into bedrock of world food culture.
So, with that in mind, 13 to 24 months back, I was buying a bit of Bud and Wrigley. I bought BUD at 25, when it was very off-track. If I wait until the proposed IN-Bev buyout, I get a 160% return on my money. If I sell now, I double it.
Likewise, M&M Mars was good enough to buy my Wrigley's stock at 120% to its depressed price of about two years ago.
For the big fish assets, if you do not perform, you get eaten by bigger fish who will take your assets and make use of them.
Investors are behaving like ants in a rainstorm, scattering all over the pavement. Stick to solid, knowable investment vehicles. Look for a great company that produces strong Return on Investment (ROI), Return on Equity (ROE) and Return on Invested Capital (ROIC) that sells at a significant enough discount to value that it is a good buy, and has management that is either recovering from prior bad management, or that is navigating through some bad waters for the sector in which the business operates.
Buying a dividend stock that pays in excess of the current rate of inflation preserves capital to a degree, and buys you some patience as you watch the turnaround unfold.
Right now, of the food, and spirits group, Diageo PLC still offers an excellent price to value.
While I don't think that bottom has hit at Harley Davidson yet, it is coming. I am keeping an eye on the stock, but I have not personally pulled the trigger on it. HOG is a great company, and has a very predictable cost structure. The tea leaves on international demand are what the analysts are studying. I want to know more about how the boomlet, the kids of the baby boomers who flock to Harley, are looking at the product.
If you're looking for investment ideas, two years ago, you should have been looking at practical food items. Today, exactly because the luxury goods companies are now largely the depressed, you should be looking at the best of their beaten-down stocks to find opportunities.
The lemming-literati love using the term "flight to quality" for falling off the crowded cliffs of supposedly-safe bonds. The flight should be into the areas that have already been burned and scorched.
Once a stock has been pillaged enough, the shorters and other raiders, like termites, leave to attack another healthy host. Pick them up while they're cleaning up the smoking remains, and you get to benefit from the financial gravity that carries quality stocks out of the dumper and over their fair market value.