Company criteria for long-term investment
Companies that produce consumable products usually have stable performance and can grow consistently both when the economy is good or slowing down. Because the products they produce can guarantee recurring income for companies with relatively low production costs.then don't be surprised, companies that produce consumable products usually have high gross margins and have endurance during a crisis.
What are examples of consumable products? Among other toiletries, washing equipment, fragrances, cosmetics, food, snacks, drinks, herbal medicines, office equipment or stationery, vehicle and machine spare parts, contents of staples, printer ink, and others whose main life is short.the opposite of consumable products are durable products or products with a longer and longer lifetime, for example refrigerators, televisions, ceramics, tables, chairs, toilets, mattresses, sofas, cabinets, home air conditioners, vehicles, machines, computers, printers, etc.
Products that are consumable are more affordable but people will continue to buy them even when the crisis strikes, because their useful life is fast.Really, during a crisis people want to stop showering, stop eating, stop washing? Conversely the purchase of durable goods is usually strongly influenced by macro conditions and people's purchasing power.
For example, during a crisis, interest rates continue to rise, then home sales will decline so sales of furniture or home interior equipment will also go down.during crises people also tend to delay buying cars, and manufacturing companies also delay buying machines and vehicles.
So we can understand that companies like $ UNVR $ ICBP $ MYOR $ SIDO $ ULTJ can maintain their performance when the crisis strikes. The products they produce are timeless, evergreen, and are not easily disrupted by technology.because the presence of their products is very important to fill the stomach or clean themselves and our home supplies.
Their performance does not grow spectacularly at certain times, but can grow consistently continuously (slow but consistent).Examples of global companies that produce consumable products include Coca-Cola, Nestle, P&G, Heinz, See’s Candies, Cadbury, PepsiCo, Monster Beverage etc.
In valuation these companies are indeed expensive, but the prospects for growth in their performance are still very open so it is worthy of long-term holding. Until whenever their shares will continue to survive at high prices.yes because they are a great company whose products will always be purchased, and have a strong brand that is inherent in the hearts of consumers.
Producing consumable goods is easy, but creating brand awareness is difficult and this is one of the company's intangible assets.so the company's products are not only needed, but also preferred compared to similar products offered by competitors.
In addition, the products of these companies do not have a negative stigma in the minds of some people and are not regulated / intimidated by government regulations.negative stigma here can be related to health awareness and also the prohibition of religion to consume it. So I didn't mention companies like HMSP GGRM DLTA MLBI, even though they also produce fast moving consumer goods.
That is why in my portfolio, for example, currently only contains companies that can produce consumable products.each company has a strong product brand with low technology, such as SIDO with its wind-repellent herbs, EKAD with its Daimar tape, and SMSM with its Sakuranya filter.
The three of them also have a strong position compared to their competitors with strong competitive advantage.and I am sure, the products produced by these three companies will continue to exist and will not undergo many changes for the next 30 years.
I think herbal medicine is more prospective than chemical drugs as people are more aware of choosing to consume drugs made from natural ingredients than those made from chemicals.Moreover, herbal medicine products made by SIDO have fulfilled the rules of Good Traditional Medicine Manufacturing (CPOTB). Jamu is an old-fashioned and old-fashioned product, but with innovations made by SIDO, it can be consumed easily and pleasantly in each generation.
Then, the use of duct tape will continue to be needed and is a mandatory item in homes, offices, shops and industries.Moreover, in the future, the era of e-commerce will increase the consumption of duct tape.then what about the SMSM vehicle / heavy equipment filter? Hehe I have reviewed it in this paper: https://stockbit.com/post/3237515.
Lastly, a company that has strong durability, one of its characteristics is to have a niche market and consumable products, and is also equipped with a strong brand and competitive advantage.No less important, companies must also maintain quality and continue to innovate continuously to respond to every change in trend.
For example herbal medicine, from the first herbal medicine remains herbal, nothing has changed. Only the method of use has changed. That's all thanks to innovation. Then, who would have thought that the use of liquid soap today is preferred over bar soap?
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