“Only buy something that you’d be perfectly happy to hold if the market shut down for ten years.” – Warren Buffett
Warren Buffett must have been quietly laughing to himself on the afternoon of Aug. 22. As some people were freaking out because they were unable to trade in and out of Nasdaq-listed stocks for three whole hours, the Oracle of Omaha was perfectly happy in the knowledge that his portfolio was built for the long term. If you were among those who were worried about their investments between 12:14 PM and 3:25 PM that fateful day, maybe one of these three longer-term investments are worth your consideration.
Energized company transformation
Over the past ten years, the management team at Energizer Holdings, Inc. (NYSE:ENR) has had to prove to the market that they are more than just their namesake. And with the July 31 announcement that the company is purchasing Johnson & Johnson‘s feminine hygiene business, Energizer has once again showed that there is so much more to this company than disposable batteries.
Often described today as a mini-Procter & Gamble, this battery-powered company began its transformation back in 2003 with the first of many diversifying acquisitions. Buying the Schick-Wilkinson Sword business from Pfizer for $930 million, this wet shave division is now the company’s largest, contributing $1.68 billion in net sales last fiscal year. As for Energizer Holdings, Inc. (NYSE:ENR)’ alkaline battery business, which was the company’s bread and butter in 2002, it was just 27% of the company’s net sales in 2012.
With the acquisition of Johnson & Johnson’s Stayfree, Carefree and ob feminine hygiene brands thrown into its ever growing portfolio of shaving, feminine care, baby care and skincare products, Energizer Holdings, Inc. (NYSE:ENR) will become that much less reliant on its declining, yet still profitable, battery business during the next ten years.
Top shelf investment
If there is one thing that I am 99.999% certain of, it is that people will still be drinking whiskey, vodka, rum and beer during a ten year market shut down. Not even a constitutional amendment could stop that fact of human life. That alone is reason enough to own shares of the world’s largest liquor company, Diageo plc (ADR) (NYSE:DEO). But if you are looking for more reason than that, please continue reading.
Owning some of the world’s most popular brands (Johnnie Walker, Smirnoff, Captain Morgan, Guinness), there is little not to like about this London liquor giant. Diageo plc (ADR) (NYSE:DEO) has incredible pricing power and a worldwide distribution system that is second to none in the industry. And thanks to investing early and heavily in countries like Brazil, Russia, India and China, Diageo has the highest emerging market exposure of any of the major liquor companies.
Although emerging market countries have recently fallen out of favor with investors, it is still possible to navigate through these troubled waters with smart company leadership, which Diageo plc (ADR) (NYSE:DEO) has in abundance. Today Diageo receives a whopping 42% of its net sales from the emerging markets. As a point of comparison, the world’s 4th largest liquor company, Beam, currently receives only 15% of its net sales from emerging market countries.
There is no doubt that the BRICs and other developing countries have been a particularly sore spot for investors this year. And for Diageo plc (ADR) (NYSE:DEO) specifically, the company did report in July that its sales growth was below expectations due to a slowdown in Asia and Brazil. But all of that is just a short-term concern for the company; an assessment that investors appear to agree with, as shares of Diageo plc (ADR) (NYSE:DEO) are just 6.5% away from making a new all-time high.