| DAILY ISSUE Best of 2025: Ask These Two Questions to Find the Next World-Dominating Companies VIEW IN BROWSER
Hello, Reader. If you were to compare human beings to companies, there aren’t many similarities to hang your hat on. For starters, we are, obviously, alive, and companies are not. However, companies are living, breathing organisms – they just so happen to subsist on a steady diet of market share gains and/or expanding profit margins. And also much like us fragile humans, companies enjoy a lifetime of indeterminate length. But their lifespans do eventually come to an end. Most investors ignore or overlook this important reality. They tend to think of their core investments as “forever stocks.” But that sort of perspective can be a dangerous one – especially now that artificial intelligence is running amok in the global economy. AI is spawning thousands of such companies, many of which will conquer and replace established companies that may seem indomitable today, if not immortal. That’s the process an Austro-Hungarian economist by the name of Joseph Schumpeter called “creative destruction”… and it is an inescapable facet of economic lifecycles. As investors, therefore, we cannot afford to bemoan new technologies like AI; we must embrace them. Companies will come and go, whether we like it or not. So, in today’s Smart Money, I’ll share how I choose the strongest companies to invest in… and give away some stocks that pass the test. | Recommended Link | | | | This isn’t a boom where everyone wins. It’s a transfer from one group to another – like railroads (1800s) and internet (1990s). Louis Navellier, who spent 46 yrs on Wall St., built the grading system institutions paid $24,000/yr for him to evaluate stocks with. Now, his system shows exactly where the $7 trillion is flowing. And it’s not AI. Click here for the full story. |  | | Ask Yourself These Two Questions… Remember Blockbuster Inc.? It was the king of the hill in the movie rental business. But then along came rental channels that provided a measure of efficiency, like when Netflix began offering DVDs by mail. So, our mission is to cozy up to the up-and-comers and steer clear of the down-and-outers. Unfortunately, because the process of creative destruction resembles a chaotic war zone, we cannot always identify the winners or the losers immediately. But this essential two-part test can help cut through the fog of war to provide clarity and insight, long before the hostilities end. The test relies on one word: efficiency. Since the process of creative destruction is a war of efficiency, the creator-victors of this war provide efficiency gains, or utilize them. The “destroyee”-victims do not. It is the secret sauce that converts upstart companies into world dominators. Recent geopolitical events – like the U.S.’s strikes against Iran’s nuclear sites over the weekend and Iran’s missile attack on a U.S. base in Qatar today – also work to highlight the importance of efficiency, as companies that can quickly adapt or secure their supply chains using advanced technologies like AI will become victors. So, when analyzing new investment opportunities, or evaluating existing positions in your portfolio, ask yourself these two questions… - Is this company introducing a significant efficiency boost, relative to the established, market-leading product or service?
- Is this company applying new technologies to boost the efficiency of its operations?
If the answer to either question is “Yes,” congratulations – you’ve probably got a creative winner on your hands. If the answer to both questions is “Yes,” you’ve definitely got one. The inverse is also true, of course. Companies that elicit a “No” answer to both questions are heading for the “destroyee” side of the creative-destruction spectrum. Efficiency gains do not always show up immediately in financial statements, but they do show up eventually in various ways: Expanding profit margins, a growing market share, rising revenues, or all of them at once. One of America’s earliest success stories illustrates the power of efficiency… Looking Back… and Looking Ahead I’m talking about Ford Motor Co. (F). During its formative years in the early 1900s, this company’s profile would have provided a resounding “Yes” to both of my efficiency tests. When Henry Ford sold his first Model T vehicles in 1908, the sticker price was $850. But after he and his team had developed an efficient moving assembly line in 1913, he was able to price the Model T at just $440. Thanks to additional refinements, Model T prices continued falling for several years, until finally bottoming out at $260 in 1925. Not surprisingly, as sticker prices dropped year by year, annual sales skyrocketed. Case studies of corporate successes like Ford inform my investment process at Fry’s Investment Report. Up and down the portfolio, we find companies that are either introducing new efficiencies, applying new efficiencies, or both. Take Corning Inc. (GLW), for example. The company’s market-leading products across several high-demand categories provide dramatic efficiency gains. Its fiber-optic components significantly boost data-transmission capacity in numerous end uses, like data centers. Then there’s another one of our holdings, a Korean company that emulates the Amazon-like business model to revolutionize retail commerce in the country – i.e., the goods come to your door, rather than you going to where the goods are sold. I reveal the name of this company in my special presentation, which you can watch here for free. To learn more about the rest of my efficiency plays at Fry’s Investment Report, click here. Regards, | 
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