Marc O. Schmidt column: The secret to the success of “boring” business models | News

The stock market turmoil of the last few months should confirm some skeptics that stock trading is like playing roulette and that ultimately only banks and brokers win. In reality, however, when looking at the “big picture” of exchanges, a completely different picture emerges.

Stock exchanges cannot be beat

Because over the long term, broad equity markets continue to rise and returns are generally much higher than with all other asset classes. An example of this is the DAX, which, despite all its failures since 1987 (December 31, 1987: 1,000 index points), has so far recorded an average price increase of almost eight percent per year.

Other well-known indices, such as the Dow Jones and the S&P 500, are also showing similarly strong growth in dividends on companies, showing that long-term investors in particular are lucky on their side. Great stock market legends see it that way too.

“Buy stocks, take sleeping pills, and when you wake up years later, you’ll see: you’re rich!” (André Kostolany)

For example, star investor and multi-billionaire Warren Buffett advised: “Buy stocks and stick to them. Forever.” And stock exchange teacher André Kostolany gave investors this advice: “Buy stocks, take sleeping pills, and when you wake up years later, you’ll see: you’re rich!”

High rate stability at Thermo Fisher

It is known, however, that not all herds develop equally well. When it comes to selecting the right individual stocks, investors should therefore focus on stocks that have performed well over the long term or even show better price movements than the markets as a whole. One title that fits perfectly is Thermo Fisher Scientific (WKN: 857209 / ISIN: US8835561023). In the long term, equities were characterized by a relatively high degree of price stability, especially during weak stock market phases, which ensured a steady rise in prices.

Thermo Fisher Scientific Chart: Boerse Stuttgart

Price increase: +29 percent per year

Over ten years there has been an impressive increase in prices averaging 29 percent per year. A one-off investment of EUR 1,000 in June 2012 would therefore be worth around EUR 12,500 today.

Thermo Fisher is a good example of how big price increases can be achieved even in seemingly boring businesses. Because the American group is active in the field of medical technology and thus in a sector that is rarely in the spotlight of the media.

Excellent market positioning

The reason for the strong price development is an excellent market position. Thermo Fisher is recognized as the world’s largest manufacturer of scientific instruments and laboratory materials. The product portfolio includes, for example, electron microscopes, laboratory mixers and infrared analysis devices. The company also develops laboratory information and management systems and is one of the world’s leading suppliers of laboratory consumables and chemicals.

A solid business model

In addition to its dominant position in the market, Thermo Fisher also benefits from the fact that the products offered are almost always in demand, no matter how the economy is currently developing. The business model is therefore very cyclical, which also translates into sales development.

For example, in the past seven years, revenues have grown an average of 15 percent per year, posting record sales of $ 39.2 billion in fiscal 2021. The rate of growth should continue. Analysts expect revenues to total $ 42.6 billion by 2022. Sales are expected to be $ 44.6 billion in 2023. As such, there is a good chance that Thermo Fisher’s stock will continue to be one of the best-selling stocks on the US stock market in the coming years.

If you want to bet on ten stocks that are likely to be successful and crisis-proof in the future, you can refer to the following index certificate (WKN: DA0ABP / ISIN: DE000DA0ABP0) on the “Aktien für immer Index”. In addition to Thermo Fisher Scientific, this barometer also includes, among others, Microsoft, Novo Nordisk, Nestlé, and Johnson & Johnson.

Image Credit: Thermo Fisher Scientific press photo

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