3 Companies Turning Competition Into Opportunity

Dow ends the week with gains, while McDonald's, GameStop, and Sirius XM Holdings fight competitors

Mar 28, 2014 at 6:48PM

The Dow Jones Industrial Average (DJINDICES:^DJI) finished the week on a positive note Friday, adding 58 points, or 0.4%, to end at 16,323, as new data showed consumer income and consumer spending both ticked higher in February. Personal income last month was up 3.1% from February 2013, while consumer spending rose 3% in the same period. 

The consumer services sector advanced today on the news, but lucrative industries attract competitors, and competitors are popping up like whack-a-moles in today's economy. McDonald's (NYSE:MCD), GameStop (NYSE:GME), and Sirius XM Holdings (NASDAQ:SIRI) are each fending off competition in their own way. Each method is either bold, risky, or ingenious.

McDonald's made a bold move today to combat Taco Bell's brave excursion into the breakfast market. Taco Bell, owned by Yum! Brands, now markets to early birds, with breakfast menu items like "Waffle Tacos" and "A.M. Crunchwraps." Fearing that some people may find these items appealing, McDonald's is giving out free coffee during breakfast hours between March 31 and April 13. Shares added 1.1% today on the news.


GameStop store. Source: Flickr

Lastly, Sirius XM Holdings, which added 1% today, has responded ingeniously to burgeoning competition from the likes of Pandora, Spotify, and even Apple. First of all, Sirius is already differentiated from these services, offering its own exclusive content not found anywhere else. Beyond this, Sirius has an ace up its sleeve in Agero, a "connected vehicle services business" it acquired for $530 million in November. My colleague Michael Olsen describes it as a "smartphone and operating system in your car's dashboard," and cites it as a major reason he thinks Sirius will outperform the market going forward. Agero, by allowing apps like Pandora to work within it, actually becomes more valuable as a platform itself! Clever stuff, Sirius.

GameStop faces much stiffer competition from the largest retailer in the world: Wal-Mart. Wal-Mart will begin buying and selling used video games, a niche business that GameStop has dominated for years. Shares got pummeled last week on the news, and took another hit yesterday after its 2014 earnings forecast disappointed. But GameStop stock surged today, rallying 8.8% on a peppy analyst outlook. Analysts and earnings aside, the company is proactively responding to increased competition by shifting its business model, devoting capital to open hundreds of stores focused on selling phones, electronics, and wearable devices. Risky, but potentially rewarding.

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John Divine owns shares of Apple. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool recommends Apple, McDonald's, and Pandora Media. The Motley Fool owns shares of Apple, GameStop, McDonald's, Pandora Media, and Sirius XM Radio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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