Yes, its in the nature of these companies that they don't make much money on each sales dollar (low net income margin). Otoh, their sales are humongous and generally growing. And their sales are over a diverse number of items. And having a lot of repeat sales. One has to ask what is the probabililty that something will happen to these companies such that NI declines or disappears and never comes back?
Could there be anyone else on this board who would use low margins as a reason for not ever investing in these particular businesses and be happy about it? Jeez, there are plenty of people who've gotten rich buying and holding Walmart and Costco. Maybe Best Buy too after its revamping.
Mr. Buffett has said one of his biggest errors was not buying Walmart when he looked at it for a substantial investment.
It's been reported recently that Charlie Munger, a director of Costco, has increased his Costco shares. It's apparently not known whether that's due to options or vesting of restricted units or something else. The thing is though, these additional acquired shares come at a time when Costco is near an all-time high, which would seem to indicate a still bullish view by Mr. Munger.
A criticism of Buffett is that because he's a pal of Munger, he totally missed/overlooked buying Costco when he could've and should've bought it, his being on the inside track (talking with Munger), or at least being quite aware of Costco progress and prospects. The mistake being he had $Billions to invest, and apparently never touched Costco.
One buys what one believes will make one money, and passes on those stocks that one believes won't or that don't fit one's criteria. Which is fine. These stocks are not for you (or Buffett apparently). ok. The actual stock performance of a couple of these stocks over a long time though seems to show your negative opinion about low profit margins overlooks some good investing opportunities. |
