Ever wonder what people mean when they refer to a "pure play"? Well, a pure play company has a single business focus. Ballard Power Systems is a pure-play in the fuel-cell industry, while other firms, like United Technologies, have fingers in the fuel cell pie, along with many other pies.
Until it was snapped up by Unilever a few years ago, Ben & Jerry's was an ice cream pure-play, compared to the conglomerate ConAgra, which owns the Healthy Choice brand that includes ice cream, as well as many other disparate businesses, such as Butterball turkeys, Hebrew National hot dogs, Hunt's tomato products, Jiffy Pop popcorn, and LaChoy Chinese foods.
When investors are drawn to a particular kind of business, they may seek out a company that's a pure play, so that their invested dollars won't be spread out over other, less desirable business segments. Of course, it can also make sense for investors to favor some conglomerates because of their diversification. If one business line falters, others will bolster the company.
Check out these articles for further Foolishness:
- Ballard's Power Drain
- Foolish Forecast: United Technologies Still Lucky?
- Unilever Needs to Do Better
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