Long before ChatGPT and artificial intelligence (AI) took over the digital world, legendary investor Peter Lynch was telling stock market investors to get out into the real world.
His advice? Do your own ‘boots-on-the-ground’ research. Visit popular shops and restaurants. Listen to people talking, especially young people (not in a creepy way). Notice what others are buying.
It might sound quaint in the age of AI, but it’s my strong belief that this old-school approach still has serious power. In fact, I think it’s something that even the smartest AI will never replace.
Observations
Here’s an example to put some flesh on the bones. Let’s say it’s May 2023, and someone hears a young family member talking about a new budget shopping app called Temu. They bought a smoothie blender, jumper and a phone case, all for a tenner. I make a mental note.
Not long after, they hear other people talking about Temu, suggesting that it’s quickly going viral. So they dig in and discover that Temu is owned by Chinese e-commerce firm PDD.
After more research, they like what they see and invest in the firm. Fast forward to today, the PDD share price is up around 66%. That’s a market-beating investment.
Bots have no boots
Of course, I’m just using PDD shares as an example. Temu’s international expansion has been massively disrupted by President Trump’s tariffs. The stock is down 32% since October.
But it shows what’s possible. An earlier example might have been the phrase/euphemism ‘Netflix and chill’, which became popular around a decade ago. That suggested the brand was becoming a cultural phenomenon.
Since then, the Netflix share price is up nearly 1,000%. That return could lay the foundations for serious wealth, assuming enough was initially invested.
This kind of boots-on-the-ground insight is something stock-picking AI bots will never replace, in my opinion. After all, ChatGPT doesn’t live in the real world, and therefore has no need for boots.
Fast-growing sportswear brand
All of which brings me to On Holding (NYSE: ONON), the Swiss company behind On Running trainers. Now, I’m aware that this isn’t exactly a new brand. On was founded in 2010 and has been snapping at the heels of industry giant Nike for a few years now.
But I can’t help noticing the amount of people wearing these trainers nowadays, especially in the gym. This leads me to think the brand has genuine staying power, and therefore a lot of global growth potential.
In Q1, the sportswear firm reported that revenue surged 43% year on year to a record CHF726.6m (about $822m, at the time). It’s enjoying strong demand across all regions, via both direct-to-consumer and wholesale channels.
Of course, there’s no guarantee that this strong growth will continue. Tariffs are a headache and there’s plenty of competition from HOKA, Nike, Adidas, and more.
Plus, like On Running trainers, the stock sells for a premium price today. So there are risks.
I need to do more research into the company before I invest. But based on what I’m reading in the reports and seeing in the real world, I think the company has a lot of long-term growth potential.
As such, investors might want to carry out their own examination of this high-growth sportswear firm.
