In a recent Motley Fool newspaper column, we said that it was not necessarily a bad thing to invest in a company with low profit margins.
As an example, we conjured up what we thought was a fictitious business called Cathedral Candle Co. (ticker: WAXWIX), and demonstrated how selling a lot of candles at a 2% profit margin is better than selling very few items at a higher margin. Wal-Mart (NYSE:WMT), after all, does a pretty good low-margin business.
Imagine our surprise and delight, then, when we received the following email from the president of... yes, Cathedral Candle Co., affirming our analysis.
Hey Fool,
Nobody told me we went public!
Boy, do you guys get it right or what? (Even when unintentional.) Although Cathedral Candle Co. is a privately held company, it is a business that operates on low margins.
What are our actual margins? None of your Beeswax, of course.
Way back in 1897 a young Bavarian immigrant by the name of Jacob Steigerwald started the Cathedral Candle Co. to manufacture Beeswax Altar candles for churches. Beeswax Altar candles by Cathedral -- then and now -- are absolutely the best value for your dollar. The fact that we have been operating continuously for over 106 years is testament to the fact that low-margin companies can be rock solid. Thanks for enlightening the masses.
By the way, what's it like working for a 100-plus-year-old candle company? It's light work.
Louis J Steigerwald III
President
Cathedral Candle Company
Thanks, Mr. Steigerwald -- you have the true Foolish spirit and humor. Keep up the illuminating work!
