That headline is a quote from the Motley Fool, in a recent teaser ad for their flagship Stock Advisor newsletter, the one that pits brother/founders Dave and Tom Gardner against each other. They run through their familiar spiel, that Wall Street ignores the little guy, mutual funds managers underperform and get overpaid, and that brokers who help you trade in and out of your stocks all the time are doing you a disservice by overtrading (the Foolies tend to be “buy and hold” folks, at least compared to active traders).
So they say that they’ll calm you down, get you into the market and keep you there for the long haul. They trot out the familiar — and generally true — data, such as that missing just a dozen or so of the best days in the market can cut your returns dramatically … and more importantly, that the best days are often what folks miss, since they sell in a panic when the market is dropping and wait until those big moves higher before they’re comfortable investing in the market.
And on most of that stuff I tend to be on the same page as the Gardners, though I know many folks who are much more active traders than I and some of them are certainly successful … it’s just not my thing.
But of course, while we probably appreciate the educational stuff, the big picture commentary, or the calm counsel of the best investment newsletters, what inspires us to actually subscribe to them is that they have some hot stock idea that they won’t tell us about until we throw some cash their way. And the Fool is no different, so this new Stock Advisor ad contains a couple teaser stocks that the Gardners apparently think you can buy right now for great long-term appreciation. So what are they?
The clues, please!
“A top investor’s No. 1 stock for your money right now
“Would you invest a few dollars in a business that churns out $289 million in free cash flow annually… has $266 million in cash and investments, minimal debt… and not so much as a single inventory or accounts receivable cost?
“I sure would. But surely this must be a boring, cigar butt business, right? Wrong. What if I told you this company is just ramping up and is consistently growing its generous free cash flow… at nearly 20% per year? …
“Like Dell in the 1990s, this company is the top-rated consumer brand and undisputed leader in its category — shipping a staggering 2 million units per day nationwide.
“Also like Dell in the 1990s, it offers a lower-cost, more dependable AND more convenient level of service than the tired old conventional retail model we lived with for years.
“What may surprise you is that this company might actually have an even bigger competitive advantage than Dell had in 1990. (I’m going to get a bit technical here so bear with me…)
“You see, for each dollar of fixed assets (essentially plants and equipment that’s extremely costly to carry), this business churns out more than $6 in revenues and over 71 cents in operating profits. That’s huge.
“By comparison, the company’s closest