Whether you're a farmer, a doctor, or a millionaire living the easy life at home, all of our days are tied to some form of the economy. In conjunction, you are consuming the services of more public companies than you might realize. An understanding of this type of common consumption can be a strong tool in deciding where to invest.
Entertainment
If you have kids, or if you were born in the last 50 years, you're almost guaranteed to have watched a Walt Disney (DIS -0.04%) film. Disney is a massive media/entertainment titan that holds assets across multiple segments of the television and theme park industry. The company isn't just Walt Disney World and Mickey Mouse. If you're a sports fanatic, you've almost certainly used Disney. The company owns ESPN. If you've watched anything on ABC, like Good Morning America, Modern Family, or Grey's Anatomy, you're making money for Disney, which owns the network and many of the shows on it.
Now that Disney has acquired assets like Star Wars, 20th Century Fox, and a controlling stake in Hulu, the reach of scope is even more prevalent in the day-to-day of anyone who enjoys watching TV.
Image sources: Getty Images.
Phones
AT&T (T 1.02%) is one of the big telecom companies that many consumers use daily. Total mobility subscribers were over 165 million at the end of 2019. Beyond phones, AT&T's reach carries into entertainment/media as well. Were you addicted to Game of Thrones? AT&T owns HBO. Do you watch CNN to get your news? AT&T owns it. If you watch networks like TBS or TNT, you're also using AT&T.
The company's reach even extends to satellite television. AT&T purchased DirecTV in 2015 for $48.5 billion. Overall, the deal hasn't proven to be the most successful at present, as subscribers continue to decrease for the satellite company. The service had 20.4 million subscribers in 2014, and 19.2 million in 2018. Thus far, the business has been a rather stagnant investment for AT&T. Nonetheless, there are still a great many people using DirecTV, and in doing so, they are using AT&T.
Hydration
Water is the most essential part of life. You'd die pretty quickly without it. Consumers use water utility stocks every time they take a drink -- but which stock you are using is largely dependent on where you are. Of course, not every water utility is publicly traded, but many small water authorities have contracts with larger public utilities. Great sections of the population live in areas with public equities that essentially hold small regulated monopolies, thanks in large part to the infrastructure required for a given area.
An example of one of these stocks would be the York Water (YORW). As the oldest utility company in the country that is investor owned, York Water Co. has been in business since 1816. This stock is a prime example of the benefits and disadvantages of water utility stocks. Because of their regulated nature over a certain territory, stocks like York Water offer a lot of stability.
Revenues over the last five years are very steady, but never come close to growing more than a few percent. Earnings can have a little more growth or decline to them, but it's all still fairly stable. The catch here is that you won't see the growth rates that more traditional equities might achieve with more traditional equities. The stocks also trade at decently high premiums relative to earnings right now. York Water carries a P/E ratio over 40 times earnings. Despite this, equities like York Water can make excellent investments. From the beginning of 2000 to the start of 2020, York Water has outpaced the broader market, gaining 748% compared to the S&P 500's 130%.
This barely scratches the surface of commonly used stocks. If you have a traditional combustion-engine car, you could also mention any large oil or gas company. If you heat your home with anything other than solar or wind, you really could add any major energy company. The sheer scale of public equities makes them common in our daily lives, and can provide alert investors with an abundance of ideas to profit from the goods and services they use without thinking twice about it.
