The Great White Buffalo

The Great White Buffalo

     As elusive as they may seem they do exist, they really do. In true popular culture definition A Great White Buffalo is "the" perfect mate, that is usually unattainable. On Wall Street I would be willing to bet this would be equated to Berkshire Hathaway (NYSE: BRK.A) a company that has risen it's share price by over 10,000%! But what if I told you that The Great White Buffalo could be yours? Would you believe me? Well you should because it's true. They are called "Blue Chip" stocks, they are not as unattainable as they may seem and you probably already know most of them.
     The Dow Jones Industrial Average (DJIA), or The Dow for short tracks some of the best Blue Chip stocks. It is a composite of the top 30 public companies: American Express (AXP), Apple (AAPL), The Home Depot (HD), McDonald's (MCD), Walmart (WMT), and Disney (DIS) to name a few (you can find the full list here). Since 12/SEP/15 when The Dow was at 809.23 it has grown 1,889 % to 16102.38 almost 40 years later.

DJIA 75' to 2015' Taken from Google Finance

The Dow is where these Buffalo's live and should be hunted. While firing money at The Dow Rambo style would probably yield acceptable results it isn't very efficient. So let's practice some trigger control and take the best shots possible like Chris Kyle.
     Hunting these companies is pretty simple, most of the work is already done by the formation of the list. You will simply have to buy them at the best price which can be as complicated or simplistic as you make it. You could simply attempt to buy it at the lowest Price to Earnings ratio as possible or you can add in as many valuation criteria as you want. And to get even more complicated you could do your own industry research, sift through all the companies annual reports, and attempt to understand it's business model more than it's CEO does.

Get it?!? No tear formula!!!

     To get the idea look at Johnson and Johnson (JNJ), John and Johnson is a holding company, they own many different companies but all deal in Health Products. Their famous brands are Neutrogena, Listerine, Band-Aid, Visine, Acuvue, to name a few, and if you have ever had any kind of surgery
you have probably been operated on with Johnson and Johnson products. The industry they operate in is something that isn't affected by slowing consumer purchasing. In a bad economy people are still going to buy shampoo, medicine, and have surgeries. They boast an impeccable dividend record, having never decreased or stopped it since it's inception in 1987 with a current yield of 3.28%. They are fairly valued with a price to earnings ratio of 16 and boast the highest profit margin of any health product conglomerate I could find (25.39% for Q2 15'). Bottom line is it backs up it's position in the DJIA with great stats.
     Your search for The Great White Buffalo is much closer to an end than you think.  Sometimes the best companies to invest in are right in front of your eyes and with a company like Johnson and Johnson in your portfolio you are probably on your way to a no tear formula for investing. But don't take my word for it, do your own research.

Update: Has Fast Casual Been Perfected

Pie Five: Fast Casual Piefection

     While doing research on Pie Five I stumbled upon a few of their competitors, the main one being Blaze Pizza. I immediately started looking for excuses to visit any of their locations so that I could draw comparisons between the two. I just so happened to be traveling through Columbus, Ohio which which conveniently had a Blaze Pizza that was not too far out of the way. But before we start comparing the two lets talk about the ingredients that make a good fast casual restaurant so that you can see where Blaze is failing and Pie Five is succeeding. 

     Number One is good location, in short the store should be located in a high traffic area that contains your targeted demographic (the people you are trying to sell your product to). Number Two is the stores layout/format, it must be conducive to efficiently moving as many customers through the point of sale while maintaining positive customer experience. In a close Third is fantastic product w/ quality ingredients, it helps create the buzz to come visit and the memorable experience to come back again and again. In Fourth we have friendly and knowledgeable employees. This contributes to the overall experience and if passed over can contribute to losing your customers to the eerily similar chain across the street. And last but certainly not least, a fair price for the quality of food you are selling. Your restaurant could have the best food in the world but if it is priced too high you might lose tons of customers.
     While I can not speak about all locations I have been to one Pie Five and one Blaze Pizza. Pie Five was in an okay location just off a main strip and a major highway exit. Blaze Pizza was right across the street from one of the largest college campuses in the world. Picking from the two locations I would definitely chose Blaze, Blaze- 1 Pie Five- 0.
     The format of the stores were similar in the sense that they had quick lines that both ended by the fountain drinks, cool outlets to charge via USB, and easily accessible cafe style seating. But Blaze lost, while this wasn't the case (unfortunately for them), if very busy their line would have directly interfered with people trying to get drinks from the soda fountain. It would also make for awkward who is going which way interactions with other customers while trying to move towards the line. I also thought the giant gas fired pizza oven was a bit much. It required a single person to be able to track multiple pizzas at the same time throughout the entire day, if he isn't paying attention a pizza could be over or under cooked ruining the customer experience. Pie Five's traditional conveyor pizza oven ensures uniform cooking for all pizzas.  Along with not having a state of the art bathroom like Pie Five they were missing witty decorations to add that smile to their experience that might get them back. Blaze- 1 Pie Five- 1.
     I attempted to get the same pizza at both locations and while the Blaze pizza was larger I thought the Pie Five pizza was slightly better in taste and quality. Blaze only had 1 style of crust besides their gluten free option, Pie Five has 4. The toppings including sauces were similar but at first glance the ingredients at Pie Five had a slightly more premium look. And my favorite part, Pie Five used way more cheese. Oh, and they offer to sprinkle your pizza with "magic dust" right before you check out. Win for Pie Five, Blaze- 1 Pie Five- 2.
     While the customer service was not horrible it was not the gold standard of "Starbucks" customer service. Comparatively the wait to start eating my pizza was much longer than Pie Five, which boasts a pizza in five minutes or less. The assembly process of my pizza at Pie Five even seemed to be more carefully constructed. And while waiting at the cashier for my finished product I had a pleasant conversation with the "magic dust" lady and cashier. Blaze- 1 Pie Five- 3.
     And what causes the most confusion for me for these "Chipotle" style fast casual restaurants is the price, and how they turn a profit off of these premium products. Bottom line Pie Five is roughly 46 cents cheaper, Blaze $7.45 and Pie Five $6.99. The premium product at an affordable price is evident at both but Pie Five wins. Blaze- 1 and Pie Five- 4.
     With many premium locations already taken up by the likes of Panera, Chipotle, and Starbucks it will be difficult for either to find footholds, but not impossible. If Pie Five keeps the wins and ups their game in choosing locations they will easily edge out competitors.