The portfolios I have built in the past tend to resemble some of the more boring diversified funds I have looked at. Absent any real “glamour” or “pizzazz,” the companies I have typically focused on in the past, and still focus on today, tend to provide meaningful products to a niche sector of the market which require significant barriers to entry.
Having a clear and easy to define competitive advantage I can put my finger on is much easier to do in sectors which are mature and which have a few players controlling the majority of the top and bottom line cash flows at this point in time.
Two great examples of companies I have put in my portfolio in the past and which I would still recommend today (despite recent news which has provided significant headwinds for both companies) would be Boeing Co. (NYSE:BA) and Intel Corporation (NASDAQ:INTC).
You might say, “wait, isn’t Intel a tech company?” – while it is true that Intel is the largest producers of chips on the planet for global companies, I would refer to firms such as Intel or Apple Inc. (NASDAQ:AAPL) more as manufacturing companies that technology companies, since manufacturing is so heavily integrated into each of these companies’ business models.
When a company owns a great product and has control over its supply chain and is the best at what it does (no company is better at building planes, and doing it fast than Boeing), these are firms which I believe will continue to outperform over the upcoming decades.
Sticking to the basics, while boring, can be very profitable for investors over time (look at the ten year charts of the companies mentioned in this article).
Invest wisely, my friends.
