America's Most Innovative Companies
Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Changing the world is not an easy task, but there are still companies out there giving it a go. Companies like Google (NASDAQ: GOOG) have lots of cash and lots of ways in which to spend it, while companies like Tesla Motors (NASDAQ: TSLA) are focused on changing the world in one specific area. These companies, and some of their counterparts, have the future ahead of them. They’re working on projects that are before their time. These projects may succeed, or they could fail, but some of them are definitely worth the risk. Let’s take a look at some of America’s most innovative companies.
Google is the top of my “Most Innovative” list. This $250 billon company may have started out as a search engine but over time it has evolved into so much more than that. Sure, they still generate a majority of their revenues from search, but I’m willing to bet that we’ll see that switch over the next 5-10 years.
There are far too many projects and products at Google to list in this article, I think they’d actually fill a page or two, but there are a few that stand out as truly innovative things that could change the way the world works.
Google Wallet is one of those projects. Wallet is an application that runs on Android phones and allows payments via NFC enabled devices. I actually use this feature at least once a week, I’d be willing to use it more if more places started accepting it. The service allows you to leave your wallet at home and still pay in a variety of places. I’ve used it without a hiccup in American Eagle, McDonald’s and at vending machines. This technology could disrupt the multi-billion dollar credit card processing industry and Google could be at the helm of it.
Google Fiber is another favorite of mine, and one that I eagerly await expansion of. The project currently provides gigabit fiber internet to customers in Kansas City. Best part is, it doesn’t cost an arm and a leg, something that Comcast would no doubt try to charge for such a connection. With full expansion of this service there’s no doubting that Comcast, Time Warner, and a handful of others will be incredibly annoyed.
The final innovative project on my list, and one that Forbes estimates to be worth some $2 trillion per year is the driverless car that Google have been working on. I don’t need to go too much into this, you can probably figure out why such a thing would change the entire planet in countless ways, YouTube some videos of it in action.
You can have all of these projects, and hundreds more in your portfolio for around $750 per share, at the time of writing. That means you’ll be paying around 23 times earnings for a piece of the company, something I don’t typically do. In this instance though, I think I’d be willing to compromise as Google is averaging 23.57% revenue growth over the last five years and 22.52% EPS growth over the same time period.
Not straying too far away from the vehicle industry, I introduce you to Tesla Motors. Tesla Motors is a $4.3 billion company that makes luxury electric vehicles.
Tesla is still in its infancy as a company and it is hard to know how far, or even in which direction this company could go. Right now, they are definitely a higher end vehicle manufacturer. Their vehicles are priced right around a Mercedes E-Class, something that most families in the U.S. just can’t afford to drive.
I think as prices of batteries come down, if they ever do, then Tesla should be able to make vehicles that anyone can afford. Will they be the only ones doing it? Probably not, but they will be the most well-known name in the electric vehicle industry.
Tesla obviously comes with its investing risks. The company hasn’t made a profit, their revenues are shaky and they’re reliant on limited luxury products. I’d buy a Tesla but I’m not sure that I’d buy the stock at this stage. It has been on the rise quite a lot lately and that has left the chance at something great costing too much for me.
I think that Tesla is definitely a company for the watch list but I’d wait until earnings and revenues look a bit more consistent before pulling the trigger.
IBM (NYSE: IBM)
I think that I have to include IBM on my list of innovative companies as they’re constantly filing and being granted patents that can change the world. All of these patents come together, along with the company’s services, to present a solid, century old, $230 billion company.
What first opened my eyes to the innovation of IBM was Watson. Watson was a computer that a team at IBM built to search data quickly and come up with rapid fire answers. The machine debuted when it took on two of Jeopardy’s greatest contestants. Watson won, decisively.
You’ve probably seen the commercials that IBM has on the TV about how they are trying to create a smarter planet, that’s the type of innovation this article was looking for. IBM is big into data, logistics, and all sorts of other cool tech stuff that will no doubt lead the planet into the future. Whether they are building new traffic systems to help relieve traffic, helping police stop crime before it happens, or helping the world use less resources, IBM is innovative in nature.
Out of the three companies in the article, IBM is the best priced. The company is trading at only 14.25 times earnings. Their EPS growth over the last five years has been an incredible 14.54% and they’re even paying a dividend which is growing at 16.04% annually over the last five years.
With their massive patent portfolio and their countless innovative ideas, IBM should be a great addition to any portfolio, even yours!
Ash1402 has no position in any stocks mentioned. The Motley Fool recommends Google and Tesla Motors . The Motley Fool owns shares of Google, International Business Machines., and Tesla Motors . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!