Sometimes when I’m choosing which ad to cover on a given day it’s based on the number of questions I’ve gotten, or the number of times we’ve seen the ad in the past few days… and sometimes it’s based on something that just feels like something interesting.
Today it’s the latter… because Brett Aitken and the Stansberry folks just sent out an ad that really taps into the nervousness we’re all feeling by promising, in their words, a “Government-Proof, Inflation-Proof, Crisis-Proof, Bear-Market Proof ‘Super Stock.'”
Man, who wouldn’t want that? So I’m guessing this will send a bunch of questions our way, though I just started seeing the ad a few minutes ago so nobody has really asked yet.
The pitch is for Stansberry’s Investment Advisory (currently “on sale” for $49, renews at $199), which was Porter’s original newsletter when he carved out his own little chunk of the Agora empire, and has become the real “entry level” feeder publication for Stansberry over the years.
And the basic pitch is for these kinds of “super stocks” that they’ve said they have found through past screening, with huge returns. That sounds kind of familiar… and indeed, the first “super stock” they mention is not secret, that’s Hershey (HSY) and it’s a stock they’ve similarly teased a few times over the years because of it’s incredible ability to grow the business steadily without consuming capital — Porter often refers to this as “capital efficiency,” and it’s true that companies like Hershey, thanks in large part to strong brands, can raise prices and keep growing revenue without doing a lot of investing in new plants or employees. I covered an earlier tease of Hershey here a couple years ago that went into some detail on that “capital efficient” idea, and I owned it in the Real Money Portfolio for a while as well (I stopped out earlier this year because Hershey got fairly expensive in my book, but it’s still a good company and a lower-risk stock… I just don’t see a lot of upside from this valuation, and would prefer to buy back in next time they hit a weak spot).
The general appeal is that these super stocks are safer than the market, but still deliver high returns — and that these are also the kinds of incredible investments that Warren Buffett has built his fortune on… here’s a little excerpt of the pitch:
“Now, while we’re not affiliated with Warren Buffett, he has taken the basic concept behind the strategy that I call ‘super stocks’ to remarkable places.
“I call these unique investments “super stocks” because they do what financial theory says is impossible:
“They can deliver super-high returns with a very low level of risk, no matter the market conditions… even when other investments are crashing.
“Worried about losing money in stocks?
“Think another recession is looming?
“It could be.
“But these ‘super stocks’ almost never lose money across multi-year stretches… will outperform the market (by a mile)… and, incredibly, offer vastly less risk than the stock market.”
They give two examples of this huge potential from Berkshire Hathaway’s past, though they don’t actually identify either “secret” company — so we can tell you that their two examples are See’s Candy, which Berkshire bought from the founding family in 1972 for $25 million, only to see it deliver more than $2 billion in pre-tax profits over the ensuing (almost) 50 years… and Coca Cola (KO), which Buffett started buying for Berkshire’s portfolio in 1988. Both are brand-based consumer product stocks that provide non-essential low-cost products that are beloved (and to some degree addictive), but have been consistent profit generators for decades. And neither one of them looked really “cheap” at the time Buffett made the purchase.
So those are the kinds of ideas they’re talking about. For our purposes, though, what intrigues is that they hint at another unnamed stock that falls into this “Super Stock” category… so let’s dig in and see if we can name that one, shall we?
Here are our first clues…
“This company is one of the great American success stories. Its first store opened in 1979. By 1983, it had its 100th location.
“Today, the company has more than 6,000 stores.
“Over the past 30 years, this company has never had an annual decline in revenues. Its sales rose during the bursting of the tech bubble, the global financial crisis, and the European sovereign debt crisis. In other words, the company is ‘crisis proof.'”
OK, so it’s been around for a long time and it’s a retailer of some kind, with a steady business. What else?
“The company has a streamlined business with wide margins. It also has significant competitive advantages.
“Which is why its stock has returned more than 4,000% over the past 20 years….Are you getting our free Daily Update
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