A sign of a high-quality business is not that adversity never occurs, but rather, that the core engine still remains strong even when adversity does strike. It is something that comes to mind when I study the recent performance of GlaxoSmithKline. It has been an unpopular stock for quite a few years now. It has dealt with top-level executives accused of bribery, important drugs going off patent, and a lack of clearly identifiable sources of long-term profit growth. Yet, it still has a portfolio consisting of thousands of brands that cumulatively generate 28% profit margins.
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