Investors have found that the stock market is a great way to produce wealth in the long run. Where things can get complicated, however, is choosing the stocks that will perform best, not just today or this month, but for years to come.
With many investment trends, it can be extremely difficult to understand exactly what companies are doing. If you are not a technician, the latest software as a service platform may be beyond your understanding. And even if you know how to drive a car, trying to understand what really makes one electric vehicle manufacturer better than another can give you a headache.
You don’t have to invest in things you don’t know to make money in the stock market. Next, we’ll see two high-level growth actions with simple businesses that won’t leave you wondering how they work.
1. Boston Beer
Boston Beer (NYSE: SAM) has been a surprisingly strong move in the past year. After maintaining consistent and solid gains in stock prices for years, brewer Sam Adams has tripled in value since the beginning of 2020.
If you expect to find some kind of technology stock angle here, you will have to look for a long time. For its customers, Boston Beer’s biggest foray into the cloud occurs when they find their drinks on an airplane flight. And Boston Beer has not found a way to build a subscription-based platform for beer lovers.
Image source: Getty Images.
What Boston Beer has, however, is a popular product line. Increasingly, its most successful product lines are not beers.
Twisted Tea offers iced tea and lemonade drinks with a kick, while the Angry Orchard hard cider line also has devoted followers. More recently, sparkling water has become the new hit drink, and Boston Beer’s Truly brand is leading the way with flavors like pomegranate, lemon Colima and blood orange from Sicily.
Boston Beer’s revenue increased by 25% in 2019 and, despite the challenges of the pandemic, the company is on track to exceed this growth rate as soon as the results of the final fourth quarter arrive in 2020. Net profit is increasing at a pace even faster. This is great news for Boston Beer shareholders, and anyone who has ever enjoyed a trip to the local bar can understand the brewer’s success.
2. HR
Anyone who already owns a home knows that finding the right furniture for it can be a balancing act. Most people have a budget to follow, but they also want top-notch furniture and accessories that can give them the distinct and comfortable feel they want.
HR (NYSE: RH) aims to meet the luxury owner. The retailer does not beat around the bush, using an unusual membership model to attract his best customers to his luxurious galleries. CEO Gary Friedman’s mission is to build an unrivaled brand, known for its cutting-edge concepts to help luxury buyers build their dream homes.
As difficult as the retail pandemic has been, HR has also benefited from the fact that people are staying more at home and want the places they live in to be better than ever. Although store traffic has decreased, e-commerce sales have decreased.
In the future, RH has ambitious plans to build complete luxury ecosystems around its stores, with plans to invest in important destinations, such as the international ski resort Aspen. The company has become extremely profitable in the past three years and, with great future aspirations, HR has a long path of growth ahead.
Invest in what you know
Many growth actions are successful because they have great ideas that no one else could have. But in some cases, businesses that are very simple to understand still manage to produce strong growth. Both HR and Boston Beer are not at all confused and have promising avenues for future expansion opportunities that can sustain growth for years to come.