4 Human Condition Stocks for Your Portfolio
William is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Businesses come and go all the time. Products become obsolete or out of fashion. Sometimes the market becomes saturated and everyone who wants a product has one. Businesses that tend to thrive over the long term make what the Motley Fool calls “repeat purchase” products that will never become obsolete and outmoded. I call some of these companies “human condition” companies because they cater to some element of it.
Before I begin discussing companies that cater to the human condition I found a Wikipedia definition that fits this discussion nicely:
“The human condition encompasses the unique and believed to be inescapable features of being human. It can be described as the irreducible part of humanity that is inherent and not dependent on factors such as gender, race or class. It includes concerns such as the meaning of life, the search for gratification, the sense of curiosity, the inevitability of isolation, or anxiety regarding the inescapability of death”.
Here are four human condition companies for your portfolio:
Wal-Mart (NYSE: WMT), a global retailer of general merchandise and groceries, can fall under desire for gratification and prolonging life portion of the human condition.
In a number of regions throughout this country and the world, Wal-Mart is the primary source for inexpensive groceries, clothes and household items such as paper towels and soap. One can “gratify” their wants right along with needs. In Wal-Mart, one can pick up a package of DVDs, video games, and a toy along with needed items such as milk and bread.
Wal-Mart’s ability to relieve “anxiety regarding the inescapability of death” comes in the form of offering cheap prices on needed items such as food and a pharmacy. Wal-Mart possess a vast distribution network enabling customers to sustain their lives on more economical terms and creating superior shareholder return in the process.
The market has rewarded Wal-Mart stockholders with a market beating return of 66% including dividends versus a return of 3% for the S&P including dividends over the past five years (see chart below).
Sturm, Ruger (NYSE: RGR), a manufacturer of guns, falls directly under “meaning of life” and anxieties related to death.
“Meaning of life” comes into play from political anxieties regarding the freedom to bare arms. Concerns over possible gun restrictions from the Obama administration instills panic buying for guns and the stocks of manufacturers that make them.
According to the chart below Sturm, Ruger returned 2% gain versus a 3% loss for the S&P 500 since the election as of this writing.
The catalysts for superior long-term gains exist in Sturm, Ruger. Isolation creates fear of nasty things such as murder, theft, and rape leading to “anxiety about the inescapability of death.” People will buy guns to give them a sense of safety and protection from those elements which will be with us until the end of time.
Nestlé (NASDAQOTH: NSRGY), a global nutritional and health company, sells products related to gratification and life sustaining products such as clean bottled water.
Clean water is a precious and rare commodity in some parts of the world. Nestle creates growth for its shareholders by filling the void. Nestlé Pure Life bottled water brand ranks No. 1 in the global markets according to beverageworld.com.
Nestlé also owns the Gerber baby food brand filling a life sustaining need for infants throughout the globe. Nestlé also sell “gratifying” products such as Nestlé Crunch candy bars and Nesquik chocolate milk powder.
Nestlé experienced 3% real internal growth according to its latest earnings announcement. Nestlé experienced growth in every region of the world so far in 2012. Emerging markets comprised the bulk of this growth by introducing clean bottled water, nourishing life sustaining food, and the luxuries of ice cream and candy. Nestlé has plenty of room for growth over the next 10 years.
Smucker (NYSE: SJM), maker of jellies, jams, peanut butter, coffee and ice cream toppings, seeks to gratify the human sweet tooth. Every morning somewhere someone wakes up to hot cup of Smucker’s owned Folger’s coffee. And, people everywhere enjoy Smucker’s peanut butter and jelly on bread for lunch.
According to the chart below, Smucker returned 105% including dividends versus a 3% total return for the S&P 500 over the last five years.
Smucker possesses superior brand recognition and makes products that add flavor to other foods and life in general.
All of the companies mentioned above sell products that satisfy some aspect of the human condition. Wal-Mart sells needed items alongside luxury items such as toys, candy and electronics. Sturm, Ruger fulfills a need to feel safe in a dangerous world by making guns and pistols. Nestlé makes life sustaining products such as bottled water, food and gratifying luxuries such as ice cream and candy. Smucker manufactures popular daily use items that like coffee and peanut butter and jelly. These products will never become obsolete and will provide shareholders with superior long term gains
stockdissector has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.