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Thriving In Any Economy

Published: Friday, 19 Feb 2010 | 6:02 PM ET
Text Size
By: Lee Brodie
Producer

New research suggests the state of the economy might not be as critical to a company's fortunes, as you might think.

That’s what Harvard Business School professor Ranjay Gulati would tell you.

When Gulati wrote his new book Reorganize for Resilience, he crunched some corporate numbers and what he found may surprise you. The companies Gulati studied not only survived two recessions, but some beat the market by big margins.

What's made those stocks thrive in both surging and stagnant economies?

“When companies really focus on their customers, they achieve the holy grail of sales growth and margin growth in a dramatic fashion," Gulati says.

Exhibit A: Big Box behemoth Best Buy [BBY  Loading...      ()   ].

"This was a store designed for guys, by guys," says Gulati. “But half of their customers were women."

When they realized that critical fact, they re-focussed the entire Best Buy shopping experience and "that's why Best Buy's around while Circuit City's in the graveyard," he says.

But it wasn’t just Best Buy that Gulati studied.

From the period beginning December 31, 1999 and ending Dec. 31, 2009 other companies including Target [TGT  Loading...      ()   ] and Starbucks [SBUX  Loading...      ()   ] also beat the S&P 500 for largely same reasons – a tireless commitment to customers.

If, as Gulati says, this is the holy grail of growth, what other companies should be on your radar?

Since Frank Blake got back to Home Depot [HD  Loading...      ()   ], they’ve been running their business in much the same way.

I’d look at Amazon [AMZN  Loading...      ()   ], Priceline [PCLN  Loading...      ()   ] and Netflix [NFLX  Loading...      ()   ], says Jon Najarian.


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Trader disclosure: On February 19, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Kelly Owns (AMZN) Calls; Kelly Owns (JPM); Kelly Owns (FXE) Puts; Kelly Owns (ELX) Call; Kelly Owns (QLGC); Jon Najarian Owns (AAPL), Is Short (AAPL) Calls; Jon Najarian Owns (AMZN), Is Short (AMZN) Calls; Jon Najarian Owns (BAC); Jon Najarian Owns (BBY), Is Short (BBY) Calls; Jon Najarian Owns (C); Jon Najarian Owns (CAT), Is Short (CAT) Calls; Jon Najarian Owns (FCX), Is Short (FCX) Calls; Jon Najarian Owns (GS), Is Short (GS) Calls; Jon Najarian Owns (HD), Is Short (HD) Calls; Jon Najarian Owns (HPQ), Is Short (HPQ) Calls; Jon Najarian Owns (MS); Jon Najarian Owns (PCLN), Is Short (PCLN) Calls; Jon Najarian Owns (RSH); Jon Najarian Owns (SBUX), Is Short (SBUX) Calls; Jon Najarian Owns (WMT), Is Short (WMT) Calls; Schiff Owns (POT);  Schiff Owns Gold; Schiff Is Short U.S. Dollar; Kaminsky Owns (EPV); Terranova Owns (JPM), (RIMM), (IBM), (QCOM), (GOOG), (EMC), (AAPL), (DELL), (MSFT)’ Terranova Owns Crude Oil Futures (March 2010, April 2010, December 2011, December 2012)

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of  (DLR)
Virtus Investment Partners Owns More Than 1% Of  (EXR)
Virtus Investment Partners Owns More Than 1% Of  (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of  (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of  (XLB)
Virtus Investment Partners Owns More Than 1% Of  (XLI)
Virtus Investment Partners Owns More Than 1% Of  (SKT)

For Brian Kelly
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Copper
Kanundrum Capital Owns (GDXJ)
Kanundrum Capital Owns 9MOS)
Kanundrum Capital Owns (POT)
Kanundrum Capital Owns (IPI)
Kanundrum Capital Owns (GLD)
Kanundrum Capital Owns (C)
Kanundrum Capital Is Short (FCX)

For Robert Samuels
Oppenheimer & Co. Is A Market Maker In (FINL)
Oppenheimer & Co. Expects To Receive/Seek Investment Banking Compensation Frmo (UA) In Next 3 Months

Other Relevant Disclosure
Jon Najarian Owned (GOOG) On 1/21/10
Terranova Owned March British Pound Futures On 1/29/10
Kanundrum Capital Owned (GOOG) Calls On 1/13/10
Kelly Owned (GOOG) On 1/13/10

CNBC.com with wires

© 2012 CNBC.com


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