For example, newspapers with a large number of readers, newspapers with a steady increase in annual subscriptions, funds with high cash returns over the years, and stocks with reliable performance support and rich dividend income. These operating income can "squeeze" gold like a cow.
The cash cow in the stock refers to the stock with long-term dividends, high dividends, multiple dividends, or the strongest cumulative dividends, that is, the cash cow stock.
Extended data:
Buffett divides all companies into three types: first-class and excellent companies; Medium and good companies; The measure of inferior and terrible corporate stock gods is the input-output ratio calculated by comparing increasing capital (fixed assets) with increasing profits.
1) excellent company: able to increase profits with little capital investment. For example, Xishi Candy was acquired by Buffett for $25 million in 1972, with an additional investment of $32 million in 35 years, but it supported the company to create a cumulative pre-tax profit of135 billion.
2) Good company: It can create rich profit returns for shareholders, but it needs to continuously invest more capital.
For example, Flight Safety, a company providing flight training services acquired by Buffett at 1996, spent most of its capital expenditure on the continuous purchase of flight simulators. 1996 to 2007, the net value of fixed assets increased by $509 million, the accumulated pre-tax profit increased by $654.38+59 million, and the input-output ratio was 3 1%. Although it is far less than Xi Shi candy, it is still satisfactory.
3) Bad company: Although the business is growing rapidly, it needs to invest a lot of capital to support it, with little or no profit at all. For example, 1989, Buffett once bought preferred shares of American Airlines and almost lost all of them.
Some people compare Buffett's image of these three types of companies to cows: excellent companies eat grass and milk; A good company suckles and milks; Bad companies eat milk. But the grass was squeezed out. Choosing a company is choosing a company that can create a cash cow.
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