Is This the Ideal Retail Business Portfolio?
As an investor, I don’t like retailers. The reason for this is simple: Retail is an extremely competitive industry. If you live in an urban or suburban region, it seems that you can hardly go anywhere without seeing a retailer. The same thing goes for the Internet — nearly every website you go to is trying to sell you something, and if a website isn’t trying to sell you something, then it almost certainly has a link to another website that is.
Why take the time to separate the winners from the losers in retail when you can simply focus your research efforts on other investments? The truth is you don’t need to. Nevertheless, there are a couple of things about retailers that suggest to me that you should devote at least a small amount of your portfolio to retail. First, retail is a necessary industry. People need to consume, even if it is only the basics, such as food and clothing. Second, there is little doubt that there are a few retailers out there that have unique competitive advantages over others.
In light of this, I have decided to compile a three-stock portfolio of retailers that I think are worthwhile investments. Before I continue, though, I want to emphasize what I said above: You don’t need to have retailers in your portfolio. But if you choose to for the sake of diversification, I think the following three stocks are the way to go.