This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Quick Take: Merck Beats Whole Foods

NEW YORK (TheStreet) -- TheStreet's Gregg Greenberg was with Michael Raynor to discuss how exceptional companies function differently than their peers.

Raynor points to two basic rules, the first he says, is "better before cheaper," meaning that companies shouldn't compete on price. Instead, Raynor believes superior companies create additional value in their product, something consumers are willing to pay extra for.

The second rule is nearly just as simple, "revenues before costs," he says. The simple explanation is that exceptional companies will drive profitability with higher revenues, not higher cost cutting.

Raynor added that his studies are lifelong, meaning that he doesn't study companies over specified periods of time, but over the company's entire publicly traded existence.

While there are always bumps in the road and questionable decisions made, he has found that successful companies all have one recurring theme: Focus.

He added, "over time, they systematically stay focused on the right problems and come up with, close enough to, the right answers."

One company that ranks high, according to Raynor, is Merck (MRK), the pharmaceutical giant. While Merck's peers may have great research departments -- like Merck -- they haven't seen the same success because they haven't followed the two principles Raynor pointed out.

"What distinguished Merck, was its ability to expand internationally and to diversify its product base," he added.

Greenberg was quick to question why Whole Foods Market (WFM) was so far down Raynor's list, since it appears to be doing very well.

Raynor quickly reminded him that he takes the company's entire public existence into consideration and that Whole Foods wasn't very profitable in its early years as a publicly traded company.

Although, he does admit that the company appears to be doing many things right and has been on a tear as of late. Its profitability has been increasing and Raynor concludes that it "bodes well for its continued strong performance."

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Rocco Pendola's Weekly Options Newsletter. Focuses on short- to intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,096.52 -17.02 -0.10%
S&P 500 1,988.33 +4.80 0.24%
NASDAQ 4,474.1720 +18.1560 0.41%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs