Companies Providing Superb Products and Remarkable Opportunities
Tyler is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
All of the companies in this post will be e-companies or tech companies. Those industries have performed well in the past, and by my estimates should continue to do so in the future. Not many companies can withstand the competition that these face, and yet they don't seem to stop growing. Let's take a look.
I can't stress how impressed I've been with Amazon's (NASDAQ: AMZN) ability to provide for its customers. Twenty years ago the company wasn't even founded, and today it creates more competition for companies such as Barnes and Noble, Wal-Mart, and Best Buy than arguably any other company in the world. Its market cap is nearly $123 billion, but for investors looking to buy, Amazon shows some awful metrics. For example: it shows a forward P/E of 62.9, -$.09 Earnings Per Share (EPS), and only a .3% Free Cash Flow (FCF) yield.
These are not typically numbers that investors want to see. Some numbers people generally do want to see in a five year run: revenues that have increased 319%, a stock increase of 247%, and capital expenditures increasing 1,690% (an average of 113% each year). In all honesty Amazon is one company that I don't normally pay much attention to with metrics. The only thing I would pay attention to is cash from operations as explained by Daniel Sparks. Its business model is what sold me on the company - market cheap products to everyone you can, from the convenience of their own home. They might not profit largely on items they sell, but with 200 million active customers and around 60,000 employees, the company doesn't need large margins. What other company in the world can boast nearly 3,000 customers per employee? Not very many.
Even with the stock falling off recently, Apple (NASDAQ: AAPL) still seems like a good buy. Its market cap is nearly half a trillion dollars, and iPhones have now become an everyday item for teens. In the spring of 2011, 17% of teens owned an iPhone. The results now show that over 40% of teens own the devices, and that figure is still growing. The company currently shows a P/E of 10.59, FCF's in excess of $46 billion, and EPS of $44.15. How can investors help but be excited?
Let's look at a ten year track record of Apple so I can make a point here. Ten years ago, Apple posted EPS of $.1, revenues of approximately $6.2 billion, and FCF's of approximately $125 million. In 2012, revenues nearly reached $157 billion. That's an increase of approximately 44,150%, 2,524%, and 3,680% respectively in ten years. The crazy thing? Apple just had its best quarter to date - and many were disappointed! Yes, the stock is down over 7% in the last year, but it’s up 6,320% in the past decade. Even with these results I believe there is still gas left in the vehicle and an engine that has just recently come into its own.
One last company to consider buying is Google (NASDAQ: GOOG). Yes, the iPhone is probably the most used cell phone in the world, but Android owns the most market share. Understand the difference here. Android is used in many cell phones, not just one type of phone. Apple recently released numbers showing an increase in U.S. market share. In fact, 51.2% of all smart phones sold in 2012 in the U.S. were iOS. This is not the case worldwide as Android claims almost 70% of market share, while Apple is just under 20%.
As with Apple and Amazon, Google has performed well in recent years. In ten years the stock has increased 684%, revenues have increased 3,423%, and EPS have increased 7,880%. Not bad for a company that was nothing more than a thought just fifteen years ago. Currently the company shows a market cap of $258 billion with a FCF yield of 5.2%. Despite over $3.2 billion in capital expenditures in 2012, the rates have decreased the past two years. EPS have grown annually for ten years, and with gross margins of 58.9% in 2012, this company is in position to make you money.
The Foolish Bottom Line...
These are all impressive companies with great business models. They are arguably the biggest and best of their kind, and all have great products. Even better than their products is the opportunity they provide to investors. There are obviously obstacles for each company to overcome, but I would suggest that the positives far outweigh the negatives for these companies.
tlwofford has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Apple, and Google. 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!