McDonald’s Corporation (MCD), Family Dollar Stores, Inc. (FDO): Three Reasons to Buy Stock Even Near All-Time Highs

3. Companies have put measures in place that should help earnings for years to come.
Many concerned investors have pointed to high profit margins as potentially being unsustainable. They argue that as a result, it doesn’t make sense to buy stock at current levels and that you should wait to invest until what they see as the inevitable reversion of corporate margins to more historically normal levels.

Yet this analysis ignores the long-term improvements that companies have made to boost profits. Perhaps the most notable is the locking-in of cheap long-term financing, as companies have taken advantage of low interest rates to get the cash they need not just now but well into the future. Some of the largest and most creditworthy companies in the economy, including Microsoft Corporation (NASDAQ:MSFT) and Wal-Mart Stores, Inc. (NYSE:WMT), have turned to the debt markets to raise capital not out of need but rather as an opportunistic strategy to minimize their long-term funding costs. Such moves will help keep margins higher even when interest rates rise, as those companies with enough foresight to get long-term financing will reap the benefits for years or even decades to come.

Don’t give up
It’s understandable to be reluctant to buy stock when the prices are high. But by being discriminating with your purchases and focusing on positioning your overall investment portfolio as well as you can, you’ll find that the reasons to buy stock outweigh the reasons to keep your money elsewhere over the long run.

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The article 3 Reasons to Buy Stock Even Near All-Time Highs originally appeared on Fool.com is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends McDonald’s. The Motley Fool owns shares of McDonald’s and Microsoft.

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