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Markets  |  October 29, 2012 20:14:48

The basis of a good investment strategy: Eat and drink must be, he knows well and Buffett

Food and drink. Words that the majority of the population involves thinking about the basic needs rather than investment. This is of course correct and logical, other associations would not meant heavy professional or other deformation. Or, that's not entirely true? (Source: CSOB)

Leckomu in connection with a drink and think of investing investing in vintage wine, those with looser associations may purchase works Absinthe Drinker. However, physical purchase wine investment is not a classic, but rather an alternative, such as the need stamps, paintings and art in general.

I want to make the investment may be less tasty, but widespread. One of the world's top investors - if not most - Warren Buffett is known for investing in companies that understand and whose product is not subject to a few changes and major innovations. Therefore, it can not be surprising that the largest investment fund Berkshire Hathaway is the company Coca-Cola, which owns a stake in almost 9% for more than $ 15 billion. Among the largest investments is a company Kraft Foods, one of the world's largest food companies.

Defensive dividend bet with stuffing

Companies from the food and beverage sector, to which can be added tobacco corporations have several interesting features. First, characterized by general stability. Is stable demand for their products, and sales are stable.Given that consumers are relatively loyal to their brands and to eat and drink simply must, manufacturers are able without great adversity reflect rising prices of purchased raw materials into product prices. In other words, they are able to maintain their margins and profits.

Second, they are highly profitable. When we look at the indicators already mentioned Coca-Cola, we record margin (relative to sales) 70% in value added or 25% for operating profit. In addition, the amount of margin almost unchanged in the last ten years, both numbers are moving in the corridor about five percentage points. Suddenly we understand why this company is the darling of Mr. Buffett.

And surprisingly, I got one more important feature that makes companies like Coca Cola, attractive.Smoothly, almost without fluctuations increasing dividends to suggest that the company does not have to make frequent major investment, and that therefore the risk associated with these investments is missing. The figures relating to investments this assumption give the truth. Move is long about 6% of sales, which is, especially if we look at the margin, the value of luxury.

Revenues and investments of the Coca-Cola

Beverages, food, tobacco, why invest right now, can be found on the web Investment

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