Five companies with the Midas Touch

The phrase “The Midas Touch” refers to the ability to succeed at pretty much anything one attempts.

The term is usually used to describe people that seem to always conquer anything they attempt, but you can also apply it to companies that have proven an ability to consistently turn a profit, and consistently manage to navigate and pivot in order to keep pace with the changing market conditions.

Wall Street craves growth more than anything else. Companies can not simply rely on their current business models and expect to stay in Wall Street’s good side. The business world is very fluid, and companies that are unable to adapt and pivot are doomed.

The list of such companies is very long. Think of names such as Dell, Radio Shack, or Blockbuster. These companies, at their prime, seemed unstoppable. But in each case, they failed to adapt.

It is important to mention that we are not looking for companies that have never failed with product launches. Companies that are afraid to fail will never succeed, so there is nothing wrong with seeing a company like Google (GOOGL) fail with Google Glass, you have to accept that the fact the company took the risk is a sign that it has what it takes to eventually pump out the world’s next great product.

We want to look for companies that seem to overcome adversity, or market skepticism, and come out stronger on the other end.

The following companies seem to have The Midas Touch, which makes them highly attractive long-term buy and hold candidates.

Amazon.com

One of the most interesting stories over the last decade has been Amazon.com (AMZN). Younger generations know the company only in its current phase, but the older generations can easily remember when Amazon was simply an online bookstore. Had the company remained just an online bookstore, it probably would not have survived. However, the company took on the entire retail sector, and won. It could have remained simply an online retailer, but it branched into cloud services, and hardware, where it has also found great success. Amazon is not afraid to focus long-term and not worry about Wall Street thinks about it, which has been a great recipe for success. Willing to operate in the red for years in order to invest in new products and research, the company has become one of, if not the, strongest tech companies in the world, and it feels like everything it tries to do turns into another success.

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Chart courtesy of www.stockcharts.com

Facebook

Social media leader Facebook (FB) has radically altered the world as we know it. That is true for everyone, regardless of whether or not they have ever even visited the site. Facebook began as a desktop website, and while it found a great deal of success as such, the world started to change and Facebook faced a big problem. All of a sudden the world went mobile, and online sites were struggling to solve the riddle of how to monetize the mobile crowd. When Facebook initially went public, Wall Street was incredibly bearish on the stock, mainly a result of fear over how the company was going to be able to profit from its rabid mobile user base. Facebook realized the change that was happening, and not only was it able to start to monetize its mobile traffic, it did so much quicker than anyone could have imagined possible. Facebook has made some smart acquisitions, including WhatsApp and Instagram, both of which should provide steady revenue streams moving forward.

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Chart courtesy of www.stockcharts.com

Sherwin-Williams

In some cases, companies don’t really have to pivot, they just have to make the best possible product, and make sure they stay one step ahead of the competition. Paint maker Sherwin-Williams (SHW) is a perfect example. The company makes a top quality paint, with a name that is trusted by both consumers and homebuilders alike. The stock has been a steady and consistent winner, in particular in recent years as the housing market has recovered as strongly as it has. Over the last five years, the company has grown earnings, per annum, by 16.9%, and analysts expect the company to continue growing nicely moving forward. Over the next five years, analysts see average annual earnings growth of 11.0%, which should easily allow the stock to continue building on its recent gains.

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Chart courtesy of www.stockcharts.com

Tesla

Electric automaker Tesla (TSLA) is a tough stock to get behind at this point. The company did manage to turn a profit during one quarter last year, but that has not been the case the last two quarters. Despite the company’s losses, Wall Street remains very bullish on the stock, which is currently trading at record levels, and showing no signs of slowing down. Tesla proved that a company can make a profit on electric cars, and build electric cars that are exciting, and have the potential to go mainstream. Tesla is getting ready to launch its affordable Tesla 3, for which it has already received over 400,000 pre-orders. The car will get over 215 miles per charge, and will go 0 to 60 in just 5.6 seconds. The company has The Midas Touch in building electric cars, and if it can manage to start mass producing affordable batteries the sky is the limit for the company.

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Chart courtesy of www.stockcharts.com

Walt-Disney

Entertainment mogul Walt-Disney (DIS) is by no means a company that faces no problems. The cord-cutting phenomenon creates a big problem for the company’s pay-TV business, in particular ESPN, but the company’s Midas Touch in its other entertainment sectors keeps the stock very attractive. The company’s amusement parks are second to none, and continue to provide steady revenue streams for the company. The company’s movie studio has always been strong, but took a major step forward when the company acquired the Star Wars franchise. The fourth through sixth movies in the franchise were disappointments to rabid Star Wars fans, and many people questioned whether or not Disney would be able to breathe life back into the franchise after it acquired it in 2012 for a whopping $4 billion. Not only have the first two movies satisfied Star Wars fans, but have been huge box office successes for Disney. Disney is likely to continue to pump out a new Star Wars movie every year for years to come. If Disney can keep putting its Midas Touch on the Star Wars franchise, the future is very bright for the company’s movie segment, and the overall company as a whole.

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Chart courtesy of www.stockcharts.com

Symbols: AMZN DIS FB SHW TSLA
Michael Fowlkes

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.

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