by Scott Ronalds

Summer viewing tip: cue up The Bear on your streaming playlist. It’s a show about a young chef trained in haute cuisine who returns to his hometown of Chicago to run the sandwich shop his deceased brother left him. The ‘Feast of the Seven Fishes’ episode, chock full of guest stars and centered on a dysfunctional holiday dinner, is fascinating (and will make you feel a whole lot better about your next family gathering).

The series also provides a riveting, behind-the-scenes look at all the prep work, slang, and drama that goes down in a restaurant kitchen. I bring it up because I noticed the commercial ovens in several scenes. They’re made by RATIONAL, a German leader in multifunctional appliances for professional kitchens. The company, which touts its ‘100% Made in Europe’ quality, has an impressive pedigree, with over 600 patents, 1.2 million appliances in the market, 50 years of experience, and a 50%+ global market share. We own the stock in our Global Equity Fund (and correspondingly, our Founders Fund and Builders Fund).

RATIONAL isn’t a sexy business, nor is it a hot stock. That label today belongs to the likes of Nvidia, Tesla, Apple, and anything artificial intelligence. Rather, it’s a steady compounder. The kind of company that:

• Produces consistent revenue and earnings growth over long periods
  
• Has little debt and stable operating margins
  
• Makes a best-in-class product 
• Has a proven and resilient business model.

With parts of the market once again seeing dramatic moves (seven tech-related stocks have been driving the U.S. index), steady companies are increasingly the focus of our funds.

Not to say that such stocks won’t see swings, but they tend to be less volatile than those with high levels of debt, erratic profits, promises of lofty future growth, or ultra-high valuations. Companies that fall into the steady category also typically offer products or services that people and businesses need; things that make the world go round. And these characteristics often lead to strong long-term returns. Knowing this, they allow you to sleep better at night.

A few of our new purchases this year help to add a little colour to our investment focus.

Canadian Pacific Kansas City is a transnational railroad born from the merger this spring of Canadian Pacific and Kansas City Southern. The company operates the only network that spans North America and offers access to key ports in Canada, the U.S., and Mexico. Its trains carry commodities, industrial goods and other freight. As more companies nearshore manufacturing to Mexico, CPKC has a compelling advantage.

Costco is a name we all know. The warehouse retailer has over 800 stores worldwide and an annual membership renewal rate of 90%. Costco has enormous purchasing leverage, a growing ecommerce division, and a solid history of revenue growth and profitability. Plus, a great hot dog at an unbelievable price.

Rohto Pharmaceutical is a Japanese maker of high-quality skincare products and cosmetics, eye care products, over-the-counter drugs, and functional foods (formulated foods that offer additional nutrition and benefits). The company’s history dates to 1899 and its products are sold in more than 100 countries around the world.

The stock market is known to cause some restless nights, but hopefully you can sleep a little more soundly knowing where our investment focus lies. And if you do find yourself with a bout of insomnia, at least you’ve got a new show to watch now.