A Salute to Longevity

In a recent issue of QSR magazine, which serves the quick-serve restaurant industry, I learned of a bunch of anniversaries that various food chains are celebrating:

• 70 years: Ivar's, a Seattle-based seafood chain with fewer than 100 restaurants.
• 50 years: Pizza Hut, a unit of Yum! Brands (NYSE: YUM), with 11,000 locations.
• 30 years: Au Bon Pain, with more than 200 restaurants.
• 30 years: Ben & Jerry's, owned by Unilever (NYSE: UL), with 430-plus shops.
• 25 years: Panda Express, with more than 1,000 restaurants.

As I reviewed the list, several thoughts occurred to me. For starters, it's easy to yawn about some companies that have been around for a while. Pizza Hut, for example, doesn't stir up much excitement in me. Au Bon Pain is a place I remember patronizing 20 years ago -- and it's also a place I haven't patronized much since then.

Plenty of old-timer establishments that have gone belly-up or are struggling. Think of Pan Am airlines or the retailer Montgomery Ward. Think of Eastman Kodak (NYSE: EK) and its struggle to adapt to a digital world, or the fight to survive foreign competition at General Motors (NYSE: GM) and Ford (NYSE: F).

But it's also important to realize that although some dynamic young companies shoot to the moon -- my investment in Intuitive Surgical (Nasdaq: ISRG) tripled in value in a single year, for example -- others fizzle out. Remember Pets.com? Kozmo.com? There's a lot to be said for longevity.

When investing, we want to focus on companies that are executing well. It's helpful to look for steady and growing revenues and income, as well as growing profit margins and market share. And if you happen to run across a company that's been doing well over a long stretch of time, that can be a plus -- chances are, the managers at those companies know what they're doing and have developed effective ways of adapting to changes and challenges. Those are the companies you want to give a close look to.