Thursday, May 03, 2007

Buying Companies You Like

I watched an interesting program Monday night on CNBC detailing how four successful entrepreneurs made their money. Phil Town was one of those entrepreneurs and he made his money in stocks. Phil suggests that individuals invest in companies that make products that they like. He reinforced this point by stating that if a particular audience member bought shares in the company that made her purse (Coach) several years go, she would have more than tripled her initial investment.

I thought I would try this strategy myself and bring some of my earnings passion into the mix. The day after the program I bought some shares of Buffalo Wild Wings (BWLD). The Bloomberg printout looked pretty attractive; returning an average gain after the earnings release of 8.63%. While BWLD showed a great Bloomberg report, there were still several stocks that showed a greater string of successes. These stocks, however, were not companies that made products I liked, or even heard of for that matter. So I went with Town’s advice and played the stock that makes tasty-wings.

The company beat the street and raised guidance and I was happy to make more than 14% on my initial investment. I will try to incorporate this strategy a few more times and keep everyone updated on how these plays shake out.

Happy Trading…

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