As companies adjust to higher interest rates…no, I don’t think 0% rates are in the cards again for a long time, if ever…it’s good to have flexibility. As management consultants say, after you pay them a lot of money, “the more levers you have the better”. Levers being anything you can adjust or negotiate, such as supplier contracts, employee contracts, prices, marketing budgets, and the list goes on and on, the bigger the list the better.
And as an investor, how can you tell if a company has a lot of levers available to pull? One way is by looking at gross margins. Gross margins tell you how efficiently a company is operating, and the higher the efficiency rate, the better likelihood the company can weather an economic storm. Software providers are a great place to find high gross margins, and NICE Ltd (NICE) is a good place to start.
