Companies that provide basic, can't-live-without-'em items often make great long-term investments. But investors frequently overlook the most fundamental companies when they seek out these types of stocks. Here we look at a few companies that are even more basic than grocery stores, homebuilders or steel companies - they provide the essential raw ingredients that enable all the other business to do what they do. Plus, even during the Great Recession, these companies continued to operate without much interruption, and are likely to continue their strong performance well into the future. (For more on the effects of the recent recession, see 5 Lessons From The Recession.)

IN PICTURES: 9 Simple Investing Ratios You Need To Know

Society's Most Fundamental Ingredient?
As the name implies, Corn Products International (NYSE:CPO) makes and sells various corn-based food ingredients to customers all over the world. Its products include fructose syrups, oils, corn starches and other corn-based food products. These ingredients are essential in the production of things such as salad dressings, carbonated beverages, cooking oils, and pet food. The company has been in business for over 100 years and it's not hard to understand why.

In addition to food ingredients, other industries that rely on corn products include the pharmaceutical, paper and animal feed industries. Corn and its derivative products are absolutely essential. The company's stock looks good too: despite being up 33% over the past 52 weeks, CPO trades at less than 13 times forward earnings. Over the past 10 years, shares have appreciated by more than 240%, while the market remained virtually flat. Archer Daniels Midland (NYSE:ADM), the $20 billion giant in the space, has also been a standout performer with a near 300% share price appreciation, but ADM has a much broader business line, which includes storing and transporting agricultural products, so it fails to provide the pure play exposure CPO offers.

Speaking of Food
Seeing as food is the most basic human need, it's no surprise that Balchem (NYSE:BCPC) continues to demonstrate strong operating performance. The company provides specialty performance ingredients and products for the food, nutritional, feed, pharmaceutical and medical sterilization industries in the United States and internationally. Sales and profits have increased every single year during the past 10, including during the Great Recession years. And this company's products are not discretionary. Balchem's impressive operational record is reflected in the stock price, which fetches 29 times earnings, but investors don't seem to be abandoning the shares. (For more, see Prepare Your Portfolio For Higher Food Costs.)

The largest food and pharmaceutical companies need the specialty ingredients Balchem produces to maintain the quality and shelf life of their products. Most importantly, products from Balchem, along with corn products and other important food additives, often constitute a very trivial portion of the costs that go into the products made. So for customers like Kraft (NYSE:KFT) and Coca-Cola (NYSE:KO), the expenditures on these products are not even an issue.

Boring But Good
These companies may not have the sexy glamor of high-growth glamor stocks, but the stability and necessity of their businesses mean they should continue to maintain a stable operating record for years to come. (For related reading, see 22 Ways To Fight Rising Food Prices.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  3. Mutual Funds & ETFs

    ETF Analysis: iShares Morningstar Small-Cap Value

    Find out about the Shares Morningstar Small-Cap Value ETF, and learn detailed information about this exchange-traded fund that focuses on small-cap equities.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: WisdomTree SmallCap Earnings

    Discover the WisdomTree Small Cap Earnings ETF, a fund with a special focus on small-cap and micro-cap stocks with positive earnings.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares US Regional Banks

    Obtain information and analysis of the iShares US Regional Banks ETF for investors seeking particular exposure to regional bank stocks.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  4. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  5. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  6. Net Present Value - NPV

    The difference between the present values of cash inflows and ...
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!