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This board, and its sister "Strategy" board, seems to have recently become fan-zines of a certain pharmaceutical company. Great company, and better stock, though it may be, it is puzzling to me that recently there has been so little discussion of the type of "consumer goods" CashKing candidates that spring to mind when one considers "Great Stocks of the Past 50 years"...

Especially with the recent C-K columns recommending diversification away from tech and drugs and into "consumer non-durables" perhaps it is time to examine old standbys like Proctor&Gamble or Gillette - or for the more narrowly focused - Hershey and Tootsie Roll.
These (along with Coke) were the first ones that hit my mind when I first read the basic story of C-K investing and started poking around my kitchen for ideas.

Of course, these stock stories are going to be a bit weaker than for the Drug-Czars, but averaged back 25+ years they're still pretty good stories.

To be honest, I've yet to run the numbers seriously, but even first glance shows that the chocolate kings fail on either margin or debt or size (TR still a small cap, in fact) . Gillete is a bit debt heavy. And P&G hasn't grown topline at all for past 2+ years.

But a second look at bottom line (earnings), dividend growth (not necessarily a bad sign even if you only want the "growth" part) and "investor friendliness" has me going back for second look at each of the above.

Any other ideas out there ?

Are should we just "go by the numbers, seconded by popular demand" and drop the cash into our second Drug-Lord ?

- DD
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I tend to agree that a too much focus in one industry can be counter to the original philosophy of the CK strategy. Currently, the CK port is very heavy in the Tech industry (although one could argue in different segments, such as software, semi's and networking). Also, it seems there is a strong tendency towards another pharm (with some good arguements I might add). However, considering we are building this portfolio over several years and intend to have 10-12 CK stocks plus 4 Dow Dividend Stocks. That means 3 techs, 2 pharms (assuming SGP is added), 1 retailer, 2 financial,1 beverage and 4 Dow stocks is still relatively diverse. Now I agree, future CK selections should most likely focus outside the tech and pharm industries (e.g. a consumer-nondurable, another food/beverage, or another retailer). If this is the intent of the CK investors, this port could have some significant weight in pharms and techs and still provide a good diversification.
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>>>>However, considering we are building this portfolio over several years and intend to have 10-12 CK stocks plus 4 Dow Dividend Stocks. That means 3 techs, 2 pharms (assuming SGP is added), 1 retailer, 2 financial,1 beverage and 4 Dow stocks is still relatively diverse. Now I agree, future CK selections should most likely focus outside the tech and pharm industries (e.g. a consumer-nondurable, another food/beverage, or another retailer). If this is the intent of the CK investors, this port could have some significant weight in pharms and techs and still provide a good diversification.<<<<

Keep in mind that diversification is not measured by the number of companies you have in each industry, but by the number of dollars you have in each industry. Accordingly, future investments will shy away perhaps from our big winners. This, as of recent, would have been a poor strategy in that good things keep on happening to good companies--the best get better.
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DowDanny:

Thanks for reminding us of our roots!

For reference, I'll trot out Siegel's "Stocks for the 
Long Run."  Looking at the five best-performing stocks 
of the Nifty Fifty for the 25-yr period 1972-1997, we 
have:

Company         Annualized Return
-------         -----------------
Philip Morris    19.9%
Gillette         18.3%
Coca-Cola        17.2%
Pfizer           16.9%
Pepsico          16.7%

Four of those fit DowDanny's criteria.   Hmmmm.  We 
should think hard before dismissing this category!

Fool on,
yotommy

P.S.  I'm long Tootsie Roll (fun to say).
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Especially with the recent C-K columns recommending diversification away from tech and drugs and into "consumer non-durables" perhaps it is time to examine old standbys like Proctor&Gamble or Gillette - or for the more narrowly focused - Hershey and Tootsie Roll. These (along with Coke) were the first ones that hit my mind when I first read the basic story of C-K investing and started poking around my kitchen for ideas.

Dow Danny thanks for the insightful post in which you raised some good points. The thing to keep in mind about the pharma companies is that they have among the best margins in the business, which often leads to super clean balance sheets. It's true that many of them are not consumer companies per se, but I tend to view them as such from the perspective that they just do the bulk of their marketing to different consumers than you and I.

When it comes to high, sustainable profit margins the top tier pharmas are among the best. I have found it hard to come up with companies in other industries that match this group when it comes to the CK criteria.

I, too, have looked at the companies that you mentioned and IMHO they are just not as strong under the criteria that we are using as the top pharma companies.

Plus, the demand for pharma products does not seem to be one that will go away any time soon. Matter of fact with all the aging boomers, I'd expect demand to increase.

Phil
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How about a consumer/pharmaceutical like JNJ? That way you get your stents, your drugs, and your band-aids and shampoo.
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