Fortune Brands Inc (FO)

Stock was below $18 on 3/9......good company and deifinitely on the rise...housing hurt its high of 92

by Carlos Portocarrero, WeSeed Writer Drinking Jim Beam may not make you smarter, but paying attention to the business behind it can teach a good lesson about diversification. You've heard the term diversification before - it's all about spreading your money among different types of stocks to minimize your risk. It's sensible advice, but what if you don't have the money to buy a bunch of different stocks? Well, there are lots of companies out there that sell a variety products in different markets - essentially giving you some automatic diversification. Let's look at two quick examples to give an idea of how this works. To the Golfers Say you love to hit the links and the only ball you'll use is a Titleist. Just like your idol Vijay Singh (plus it's the most popular ball on the PGA tour). So it seems like a good investment, even though golf as a whole has been on the decline recently. So you find out that Titleist is owned by Fortune Brands (FO), who also happens to make home-building supplies and liquor. Well, it turns out their golf sales are doing really well thanks to some new technology they've been rolling out, despite golf's downward trend. As for home sales - they've found water if you know what I mean. But what do people tend to do when economic times get tough? They might stay home and pour themselves a drink. Fortune Brands owns a lot of well-known brands you've probably heard of: Jim Beam, Maker's Mark and Courvoisier. So right there you've discovered a company that's diversified in such a way that if one sector is affected, the others won't necessarily go down with it. If You Love Boats If you're a boater, you may have heard of Brunswick (BC). They make Sea Ray, Bayliner and Maxum boats, but they also make bowling equipment. A little more digging reveals they also make pool (as in billiards) and fitness equipment. This is good to know since gas prices and the falling housing market are keeping people away from luxury boats. Last quarter, Brunswick's sales were down only 3% only thanks to the fitness and bowling divisions, which increased from the year before (when times are tough, bowling is easier to afford than boating). If Brunswick was only about boats, they'd be sinking far more than 3%. Research Pays Off Next time you find a stock you love, find out what else they do and how a different product or service could reduce your risk if something goes wrong. Then, pour yourself a cocktail and tell the rest of us WeSeeders about it.