Do you know the definition of a perfect business? It’s one that makes or saves its customers money.
Do you know the definition of a perfect stock? It’s a stock of a company that makes or saves its customers money.
Although I’m facetious, why not invest in businesses that are doing good while making money?
As investors become more focused on subjects like responsible investing and ESG issues, the companies that add value to the world and its customers are likely going to deliver market-beating returns over the long haul.
MSCI estimates that over the next 20-30 years, millennials could invest as much as $20 trillion in ESG-related investments in the U.S. Many of those investee companies are likely to pursue business strategies that make the world we live in a better place.
For now, however, I’d like to focus on seven stocks to buy that will save you money, time, or both.
Stocks to Buy: PepsiCo (PEP)
It might be a stretch to say that PepsiCo (NASDAQ:PEP) saves its customers money.
However, with the company’s recent December 2018 acquisition of Sodastream, it not only saves its customers both money and time, but it also saves the planet.
Pepsi paid $3.2 billion for the at-home sparkling water brand that helps consumers turn boring old tap water into exciting carbonated beverages. Pepsi captures the at-home market while its customers spend less time at the grocery store, pay less for their non-alcoholic beverages, and reduce the amount of plastic put back into the environment.
“With its customizable options, SodaStream empowers consumers to personalize their preferred beverage in an environmentally friendly way and provides PepsiCo with a significant presence in the at-home marketplace,” stated CEO Ramon Laguarta. “I’m confident we can accelerate progress on our shared goal of curbing plastic waste and building a more sustainable future.”
It’s a win-win.
Since Pepsi closed its Sodastream acquisition on December 5, PEP stock is up 11.2%.
The most tangible proof I have that Costco (NASDAQ:COST) saves you money is the property and casualty insurance I got in February 2018 when my wife and I moved to Halifax from Toronto.
The company’s insurance partner saved us a significant chunk of money, although it’s fair to say that some of those savings came from being in a smaller city with lower odds of accident or theft.
Nonetheless, because a majority of Costco’s profits are from its annual memberships and not the profit margins on the products it sells, the company works feverishly to pass these savings on to its customers.
If Costco can get a great deal on orange juice one month, it doesn’t take the additional gross profits. Instead, it lowers the retail price in its stores, passing the savings on to the consumer.
By ensuring that you’re saving money on the items you often buy at the grocery store, Costco will be able to continue raising its annual membership fees without upsetting the customer too much.
Have you seen the funny QuickBooks ads featuring Danny DeVito? Who doesn’t like the movie and TV star?
The ads do a good job reminding small business people that they need to spend less time doing billing, communications, or ordering, and more time working on their business, perfecting growth strategies, marketing, etc.
While I haven’t seen the viewership numbers on DeVito’s ads, I’m going to assume they have been a hit for Intuit (NASDAQ:INTU), QuickBook’s owner.
As someone who freelances for 100% of my income, I can honestly say that I have thought about using QuickBooks for my small business. Anything that can save me time, aggravation, and possibly money is worth using.
In Intuit’s Q3 2019 report ended April 30, QuickBooks generated $887 million in revenue, 18.7% higher than a year earlier. Although it was only 27% of Intuit’s overall sales in the third quarter, its growth rate was much higher than its consumer segment (Turbo Tax, Mint) growth rate of 10.3% in the quarter.
I use Turbo Tax and am considering QuickBooks in the future for the simple reason that these products save me time, money, and aggravation. It’s a stock to buy.
Stocks to Buy: GrubHub (GRUB)
Food delivery services such as GrubHub (NYSE:GRUB) and Uber Eats may do nothing for consumers except put restaurants out of business. That’s a negative take on food delivery companies based on the recent news that GrubHub has been charging restaurants for phone calls — between $5 and $9 a call — that didn’t result in food orders.
I told my wife this piece of news and she quite rightly said, “How do restaurants stay in business with those kinds of fees?”
A more positive view of GrubHub is that it saves busy people time by not having to go out for food or cook after a long day at work. How much money it saves is another question altogether.
There are plenty of sites that discuss how to save money using GrubHub promo codes. One of them is Gigworker.com, a site dedicated to the gig economy. It provides ways to take advantage of these promo codes to save money on your orders through the food delivery service.
However, because there are delivery fees with most orders placed through GrubHub, I would suggest that some of the savings from promos are lost through delivery fees and tip.
At the end of the day, GrubHub is designed to save you time, while making restaurants money.
H&R Block (HRB)
Although H&R Block (NYSE:HRB) stock has seen better days — its all-time high of $37.53 was reached in November 2015 — there’s no denying that the tax preparation company continues to file a lot of America’s tax returns.
H&R Block prepared 23.6 million tax returns worldwide in fiscal 2019, 1.2% more than a year earlier, generating $3.1 billion in revenue and $616 million in operating profits.
Here in the U.S., the number of tax returns prepared by HRB increased by 1.5% while the number of U.S. DIY (Do-it-Yourself) returns increased by 5.9%. DIY tax returns accounted for 39% of H&R Block’s tax returns prepared in the U.S., up from 38% a year earlier.
The reason HRB is a stock to buy?
On July 1, H&R Block announced that it acquired Toronto-based fintech company Wave Financial for $405 million. Wave helps entrepreneurs better manage the financial aspects of their business, including invoicing, payroll, and accounting.
Given Intuit’s push into the small business marketplace, Wave gives HRB a competitive product to win business away from the maker of QuickBooks.
Long-term, the Wave acquisition could be looked upon as a transformational move that takes HRB to the next level.
As a result of Wave, HRB now provides a good risk/reward profile.
Amazon (NASDAQ:AMZN) Prime, along with all the other e-commerce services Jeff Bezos and company provide, take a toll on the environment. It’s estimated that Amazon emitted 19 million metric tons of carbon in 2017, the equivalent of five coal-fired power plants.
There is no question, however, that consumers can save money and time using the company’s products and services.
My wife’s cousin is a consultant in the small Canadian province of Prince Edward Island. Thanks to Amazon Prime, she’s able to spend far less time driving into town to pick up stuff for the household. As someone who doesn’t make money unless I’m working, I understand the desire to cut out these time drains.
Time is money as they say.
So, if you feel bad about the impact your purchases are making on the world at large, take some of the money you’ll make from AMZN stock and donate it to an environmental cause like Greenpeace.
Now, if Amazon could figure out how to eliminate its carbon footprint drain, the stock would go to $5,000 in no time, which would be a win-win.
Keep it simple, stupid.
The KISS principle definitely applies to asset managers like BlackRock’s (NYSE:BLK) iShares and Vanguard, who have captured a big chunk of the retail investor’s assets in the U.S. and other places in the world by providing ETFs; an inexpensive investment that captures large swaths of different sectors, countries, market caps, etc.
Not only do passively-managed ETFs save investors time and money from traditional active investing, but they also provide a diversified portfolio of stocks that deliver healthy returns over the long haul.
To make things even simpler, iShares have several asset allocation EFT fund-of-funds that save investors time and money.
Take the iShares Core Growth Allocation ETF (NYSEARCA:AOR).
It invests in seven different iShares ETFs that give investors a diversified core portfolio charging just 0.25% annually. The seven ETFs give you a 60/40 allocation between equities and fixed-income investments, with 60% of the assets in U.S-domiciled investments with the remaining 40% outside the U.S., including both developed and emerging markets.
Sure, it doesn’t have any alternative investments, but by keeping it simple, BlackRock’s saving you time and money. It’s a stock to buy.
Oh, and a $10,000 investment a decade ago, is worth almost $24,000 today.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.