Facts and Stats That Blew My Mind
"The devil is in the details," they say. But I think that famous expression could just as easily be, "The devil is in the numbers." Numbers matter for investors, so it's incredibly important to understand what they mean.
I spend my days reading and analyzing stocks, so I stumble across fascinating numbers all the time. As part of my investing process, I always try to seek out the larger implications behind these figures. Many times they might indicate potential growth, or reveal the nuances of a revenue stream. Obviously, the numbers aren't everything -- qualitative factors are equally important when making an investing decision. I strongly believe, however, that meaningful figures are a key part of a successful investing process, so I'll be sharing with you some of the stats and facts I've stumbled across that made me do a double take.
Water, malt, hops, yeast... and rice?
If you had to guess which company bought 10% of the total domestic rice supply each year, what would you say? Maybe someone in the food services industry like Chinese food purveyor P.F. Chang's or perhaps private-label manufacturer Ralcorp? While they'd be good guesses, they lose out to a company with a surprising rice appetite: Anheuser-Busch InBev (NYS: BUD) .
That's right -- the world's largest brewer is also the country's largest rice purchaser, gobbling up one out of every 10 grains of rice grown in the U.S. annually. The crop is a key ingredient in Anheuser's signature Budweiser brand, one of the few beers brewed this way. While the merits of rice-based beer are debated, the impact on Anheuser-Busch is more clear. With rice comprising 30% of the ingredients, the brand has a different commodity structure than competitors like Boston Beer (NYS: SAM) .
This can help or hinder Anheuser-Busch. For instance, if rice prices rise faster than competitor's inputs, Budweiser will have to raise its prices comparatively more and risk losing some of its 51% domestic market share; vice versa if rice remains comparatively cheap. Budweiser is still just one of AB's brands, but it is its biggest, so investors should keep an eye on rice prices if they're considering an investment here.
King Kong has nothing on Wal-Mart
When it comes to massive companies, retail juggernaut Wal-Mart (NYS: WMT) sets the bar. This company is so big that its decision to add choice beef to its stores pushed the wholesale price of the product to an eight-year high after it purchased so much.
This company is full of mind-boggling stats like that, but here are a few of my favorites:
- Wal-Mart's computer system is the world's largest, surpassing even the Pentagon's.
- Wal-Mart owns the world's largest fleet of trucks.
- The company is the second-largest employer in the United States, behind only the government.
So what good is that computer system? Well, just one task it performs is monitoring weather patterns. If it detects a hurricane or extreme weather approaching, it'll automatically order more strawberry Pop-Tarts from Kellogg -- a disaster zone favorite-- and get them on trucks in time to hit stores in soon-to-be devastated areas. That's some serious processing power.
The point here is that while many regard Wal-Mart as a boring investment, its economic moat is so wide that you can barely see across it. It has the scope, resources, and supply chain to outmaneuver and out-operate virtually any competitor. I would not bet against it.
Ke$ha > The Beatles?
It's true. Ke$ha's debut single "Tik Tok" has sold more copies than any Beatles single. Once I picked my jaw up off the floor and got over the horrible cultural implications here, I realized the powerful forces and investing opportunities fueling this performance.
While few would argue Ke$ha is the superior artist, none can debate the superiority of modern music distribution compared to when The Beatles were recording. The digital revolution has taken music from a physical record, cassette, or CD, and made it available as digital content. Back in 2008, Apple (NAS: AAPL) surpassed Wal-Mart as the No. 1 music retailer in the U.S. In 2009, Apple became the largest music retailer worldwide. Now it accounts for 70% of all music sales.
Apple's iTunes does away with the traditional understanding of supply chains, inventory, and manufacturing. It is able to put more content in the hands of more people faster than ever before. iTunes is slated to bring in $13 billion in revenue in 2013, which will only add to Apple's mountain of cash.
While it is depressing that "Tik Tok" sold more than any Beatles single, Ke$ha had the upper hand in terms of distribution, not to mention a larger and more connected population to sell to. Through iTunes, Ke$ha was able to sell over 600,000 copies of one song in just seven days. While the real money driver of Apple has become its iPhone, the fact that iTunes is still growing at 29% a year makes it another valuable revenue stream. The program also acts as a complement to the company's other devices, increasing its appeal. With its massive cash balance, dominant media position, and continued growth, Apple is still poised to reward shareholders for years to come.
Here today, bigger tomorrow
These three companies are all the biggest players in their respective spaces, so it may be tough to get excited about them. While it's true that many of the biggest companies quickly become household names and have most expectations reflected in their stock price, we are at the very beginning of what Fool technology analyst Eric Bleeker has dubbed "the next trillion-dollar revolution." As we move further down the road of mobile device penetration, there is one unexpected company poised to become the juggernaut of tomorrow. The Motley Fool has profiled this company in a special FREE report. You can click here to access it now -- it won't cost a dime.
At the time this article was published Austin Smith owns no shares of the companies mentioned above. The Motley Fool owns shares of Wal-Mart Stores, Boston Beer, and Apple.Motley Fool newsletter serviceshave recommended buying shares of Wal-Mart Stores, Kellogg, Boston Beer, and Apple.Motley Fool newsletter serviceshave also recommended creating a bull call spread position in Apple and a diagonal call position in Wal-Mart Stores. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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