What is the net profit margin of the company that is one of the biggest wealth creators of the last 20 years? Just 6.6%. And it’s not just in one year. In the last five years, the net profit margin has not moved into double-digits. At the same time, sales have been increasing year-on-year and profit on an absolute basis has been growing. And, of course, the stock is doing extremely well. The point here is: It is the overall size of a business that matters. And if the management is efficient, even a low-margin business can create a multibagger. We look at 5 stocks where the overall business opportunity is big and net margins are in single-digits – but the managements have a track record of executing well.
As the market experiences volatility – with more expected in the coming days – remember that this is a transient phase. What endures are investing principles. So, develop the ability to ignore the noise which volatility creates and focus on the business you either own or will own after you buy the stocks you are targeting. If the business presents a significant opportunity in terms of growth, and the management has a track record of smart