Main Street Brands for Rip Van Winkle Investors
In Washington Irving's story "Rip Van Winkle," the titular character wanders off into the woods, gets drunk, and wakes up 20 years down the line. Hopefully, he hadn't invested with Thomas Farr, who went bankrupt in 1778 while Rip was snoozing. One of the things that good investors look for is longevity. To quote Warren Buffett, "Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years."
As a retail-focused investor, it can be hard to find businesses that aren't trading on the latest fashions and trends. Here are two businesses that I would feel comfortable holding, even if I fell asleep for 10 years.
The joy of coffee
If I'm addicted to anything -- besides love, a fact I might as well face -- it's coffee. When you want to invest in coffee, you buy Starbucks . The business is huge, has a brand name that even children recognize, and the company's management has focused on growing the business for the long haul. Over the last five years, Starbucks has grown annual revenue 28%, up to $13.3 billion.
The business has built its strength on the back of its strong brand, which global research agency Millward Brown ranked as the 44th most valuable brand in the world this year. A strong brand has been the backbone of the company for years, and CEO Howard Schultz has recently expanded on that brand, pushing it out to food and tea in the same way that it's been applied to coffee.
Over the next five years, the company is adding another 3,000 locations in the Americas. With the combination of product growth and location growth, I feel confident in Starbucks' long-term prospects. This one is sticking around.
Betting on history
While past performance isn't a guarantee of future performance, it sure as heck helps gauge the likelihood of success. Not a whole lot of companies can boast the history that Nordstrom can. The company was founded in 1901, surviving everything from World Wars to Depressions to get to where it is today. Last year, Nordstrom managed a 7.3% increase in comparable-store sales, helping to push revenue up 12% for the year.
Nordstrom is one of the companies I love because, in addition to its strong brand, it has made customers the focus of its operation. The stores are now adding roving registers -- to help customers check out easily -- and the company has put a good chunk of resources into making its operations truly omnichannel. Customers are already seeing the same lineup in stores as online, and soon the online experience will be personalized to each shopper. With its long history of success and current plans to expand its customer offerings, Nordstrom is another stock that I'd be happy to forget about for a decade.
The bottom line
Whether you like the idea of a brand so big it can't be unseen or a company with a history of success reaching back to the McKinley assassination, these two brands offer great places to start. The beauty of these kinds of companies -- and there are many more -- is that you never go to bed worrying about your investments. That's peace of mind that you can't put a price tag on.
On the other hand -- diametrically opposed to Nordstrom -- J.C. Penney is a stock that absolutely terrifies me. While it may be set for a turnaround, I simply can't stomach the roller coaster. If you're interested, though, check out The Motley Fool's special report on the company. Learn everything you need to know about JCP's turnaround -- or lack thereof. Simply click here now for instant access.
The article Main Street Brands for Rip Van Winkle Investors originally appeared on Fool.com.Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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