In cars, we buy best of breed. Not even an issue. We pay up for the brand because we know that a brand, a good brand, signifies reliability. It signifies a higher level of service, a quality of ownership that can pay dividends for years.
Why don’t so many of us feel that way in the stock market? Why are so many drawn to a Safeway (SWY – Cramer’s Take – Stockpickr – Rating) or a Kroger (KR – Cramer’s Take – Stockpickr – Rating), inferior supermarket chains, when Whole Foods Market (WFMI – Cramer’s Take – Stockpickr – Rating) is clearly the best of breed?
Why did so many people lose money in so many different audio component stores, when Best Buy (BBY – Cramer’s Take – Stockpickr – Rating) is the only company that delivers sustainable profits in that retail sector?
Why would people want to own General Motors (GM – Cramer’s Take – Stockpickr – Rating) or Ford (F – Cramer’s Take – Stockpickr – Rating), just because those stocks are down a lot, when they could own best-of-breed Toyota (TM – Cramer’s Take – Stockpickr – Rating), which is taking share and making big profits? I know they are drawn by the low dollar amount of the American carmakers, but Toyota is the cheapest and the best, a rare find.
The list goes on and on. Way too many of you are unwilling to pay up for best of breed because you think that you are getting short-changed. There are very few bargains out there in the world of secondary and tertiary players. I believe that when it comes to price-to-earnings multiple, investing in the more expensive stock is invariably worth it because you get piece of mind.
That’s why I say:
Own the best of breed; it's worth it.Take Walgreen (WAG – Cramer’s Take – Stockpickr – Rating) and Rite Aid (RAD – Cramer’s Take – Stockpickr – Rating). Sure, Rite Aid seems perpetually in turnaround mode and you have to love the cheaper stock. Don’t you? Not me; I have to tell you that I think Walgreen is the bargain of those two, because I never mind paying a higher price for the better company.
Forget about it. Buy best of breed. Pay up. You almost never will find yourself regretting it.
