Black Friday is almost upon us.
And many shoppers are already hunting for potential “Black Friday” bargains.
But I have another idea for you…
As ordinary South Africans head to the stores, set on spending more, owning more and having more, why don't you park the trolley and, instead take this opportunity to treat your future-self.
Now I'm totally for saving money.
And, I totally understand if you use the Black Friday Specials to wisely purchase vital items at a discount. But, for many it's too easy to be swept away by this frenzied shopping fiasco. The likelihood is you'll overspend on things you just don't need.
So, while I'll be stocking up on value items, I've also learned moderation is key to my personal happiness.
I say cut the clutter!
This year, I'll be avoiding the queues, the hassle, the traffic and instead using my end-of-year bonus to stock up on the gift that keeps on giving…
I'll be buying these blue-chip stocks that actually benefit from the Black Friday madness!
Read on below…
‘The Great JSE Takeover’
If you’d bought stock just before these companies were taken over... I'm talking about Absa, SA breweries, and more recently Clover and Pioneer Foods they 'would likely [ have been] some of the best investments, you could have made says analyst Francois Joubert.
Now, a similar opportunity is building. But this unfolding story is a lot BIGGER
Black Friday Stock Pick #1: Amazon (AMZN)
You can’t talk retail, and you certainly can’t talk Black Friday, without including the online retail behemoth Amazon.
Over 25 years, Jeff Bezos’ juggernaut has crushed its competition and spread its influence into all spheres of the market.
And, while it’s going to have a stack of business coming through this festive season, it’s easy to argue that Amazons’ most exciting times still lie ahead.
Amazon Web Services (AWS) is absolutely pumping. It reported revenue of $9 billion in the second quarter, which is up +35% from a year earlier. This division is taking on the likes of Microsoft head-on in cloud computing.
It recently bought PillPack as it moves into pharma-retail and is even looking at transportation via Rivian and electric Truck maker. There would be obvious logistical synergies for the company as it continues to expand its one-day delivery service.
Not a bad job for a company that started as an online bookstore in 1994.
Black Friday Pick #2: Alibaba (Baba)
If you’re looking to capture your slice of the international retail pie, you’ve also got to invest in a business that operates behind the Great Firewall of China.
Alibaba has proven itself to be more than a match for other eCommerce players. Jack Ma started the business in 1999 as an online marketplace. If you don’t know this company, it’s like a combination of eBay and Amazon.
To give you an idea of the scope of this business, in 2015 it accounted for more than 75% of China’s online retail sales.
You may think, that was before the Chinese nation was online but by the end of 2016 some 731-million Chinese were using the internet to purchase goods and services. That’s more than twice the size of the United States entire population.
But since we’re talking Black Friday and shopping holidays, it’s probably important to make the distinction. Alibaba actually has its own personal shopping holiday: Single’s Day.
If you haven’t heard of it, it’s the world’s biggest shopping day in terms of total sales. It’s bigger than Thanksgiving, Black Friday and Cyber Monday combined. It’s held annually on the 11 of November i.e. 11/11 because the four “ones” represent singles.
This year Alibaba raked in more than $38 billion in sales on this single (excuse the pun) shopping day.
To put it in perspective: That’s about 10% of South Africa’s yearly GDP.
In other words: If we added together all economic activity in South Africa for more than a month, across all people and all sectors, it gives the same value as this company’s sales for ONE DAY!
Fortunately, while this is a Chinese company, you can easily buy this company on US exchanges (with US regulatory protection) via the ADR. But more on this later.
What’s in the box?
Your opportunity to bank a forever income with Forex
Black Friday Pick #3: Nike
Finally, we get to Nike, which offers you something very different from the two platform businesses above. You see, while both Alibaba and Amazon do sell their own products, they focus on giving you access to a wider network of suppliers. They provide the “shop” rather than the “product”.
Nike on the other hand is supplying the physical goods themselves.
And, in media and broadcasting there is a simple truth: Content is king.
This is a philosophy espoused by Microsoft founder, Bill Gates, and it’s worth reading his essay on why content/product will always eventually win over the platform/shop.
Essentially, any platform business must evolve or be relegated to the “utility” zone. A terrible world in which they simply supply their essential goods and services but have no “moat” or edge over the competition. If a business has no “moat” it’s pretty much impossible for them to make super-normal profits over any length of time. Any time they try to raise prices, and increase margins, a competitor will simply emerge and deliver the product at a lower cost.
Nike on the other hand has just such a moat. This moat has been proven time and again.
It’s the company’s brand.
You’d be hard pressed to find a person on this planet who hasn’t heard of Nike or doesn’t recognise the signature “Swoosh”. This trust (and recognisability) has allowed Nike to do what others can’t.
They can push through higher margins because you’re not just buying the intrinsic manufactured good, you’re buying the quality, a sense of community and the story that comes with the brand.
And stories are powerful. Perhaps one of the most powerful things human beings respond to. It’s in our DNA, we can’t escape it.
We might know those shoes only cost $2 to make, but if we’re sure they’re authentic Nike products, well, we’re quite happy to pay $100 a pair. The $98… well, after the cost of creating the “story” … that’s all profit.
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So, what next?
These are just three of the companies I hold in my managed portfolio. They’re all international companies, safe from the ravages of SA politics and have excellent long-term growth trajectories.
And, while they might be some of the most exciting global companies for investors, I’m also happy to report, as a Money Morning subscriber you can access these companies by simply gathering your FICA documents together, clicking a few buttons and depositing your funds into a local bank account.
And, heck, since Black Friday is approaching, I’ll do you a special deal as well. If you make your application for a managed portfolio account with me before Black Friday (29 November 2019), I’ll do your entire implementation at cost.
That means you’ll have a ZERO execution fee on this investment. To make sure you qualify, include the words BLACK FRIDAY SPECIAL in the subject line of your email.
Rand Swiss, Wealth Manager