Use This Simple Secret to Find the Best Stocks

One of the secrets to finding the very best investments is so simple, most people don’t pay attention to it…

If you’d known about this secret back in 1994, you could have bought Colgate-Palmolive for less than $10 a share and made more than seven times your money.

If you’d known about this secret back in early 1995, you could have bought Microsoft for $4 and made more than six times your money.

If you’d known about this secret back in 2003, just seven years ago, you could have bought McDonald’s for $13 a share — and made more than six times your money, including a growing stream of dividends.

When you take into account the crashes of 2000-2002 and 2008-2009, it’s especially amazing that some investors are up this much. What’s their secret?

They look for companies with the highest sales in their industry.

I realize this sounds so obvious it’s almost laughable. That’s because the real secrets to successful investing aren’t complex. They’re so simple, anyone can understand them. For example, “Buy low, sell high” is laughably obvious. It’s just that almost nobody has the discipline to actually do it.

Selling the most in your industry is the definition of success in business. Microsoft Windows runs about 90% of the world’s personal computers. Intel sells about 80% of the world’s microprocessors. Campbell’s sells more than 70% of the world’s packaged soup. More than 60% of the world’s credit and debit cards say “Visa” on them. Colgate-Palmolive sells more than 40% of the world’s toothpaste. These are all excellent businesses with huge, consistent profits.

Once a business sells more than any other company in its industry, it becomes incredibly difficult to compete with. Imagine trying to build a home-improvement business today. You’d have to compete with Home Depot and Lowe’s. Imagine trying to build the world’s most popular retailer.

You’d have to compete with Walmart. Walmart has probably put thousands of grocery chains and mom-and-pop shops out of business. Imagine trying to make better French fries and sell more of them than McDonald’s. Never gonna happen. There’s no substitute for being No. 1.

Think about Amazon. It used the Internet to sell more books to more customers than any bricks-and-mortar bookstore chain ever could. Borders and Barnes & Noble are in terrible shape today because they failed to do that. They can’t compete with Amazon, because Amazon will always be able to sell more books.

If you’d bought Amazon shares just four years ago, when they were less than $30 each, you’d have made nearly five times your money during a time when most stock market investors lost money. Even during the lowest point of the financial crisis, in March 2009, you’d never have lost money. Buying the company that sells the most was all you needed to know.

If you sell a product people like and want and figure out how to sell it to more customers than any other company, you will rule your industry. If investors are smart enough to know what you’re doing, they can make a fortune owning your stock.

Whether it’s burgers, bandages, or books, investors owe it to themselves to know about the company that sells the most. In most cases, if the stock is cheap enough, the top seller is the best investment you can make in that industry.

Not all the world’s best businesses sell more products than their competitors, but many of them do. And these companies should be on your investment radar screen — if they’re not already in your portfolio.

[Ed. Note: Another way to make safe, sure gains in the stock market is to buy what Dan Ferris, editor of the Extreme Value newsletter published by Stansberry and Associates, calls “extreme value” stocks. For example, Dan’s two latest extreme value investments are up 55% and 69%. The two he closed last year made readers 248% and 249%. Click here to test-drive Dan’s research today.]