So what are the best companies to invest in? If you are expecting a fancy answer with tricky financial terminology, then hold your breath. The best companies to invest in are, simply, companies that will be in business for a long time. Would you purchase a house that is going to collapse in a matter of days? Would you invest in a vehicle that is going to break down in a matter of months? No. So why would you invest in a company that will eventually go out of business?
So how do you find a company that will last a long time? Believe it or not there are a few companies still around today that were around more than 100 years ago. Some great examples of companies that have been around for 100 years are more are:
- Walgreens Company - Walgreens was established in 1901.
- Proctor & Gamble - P&G was established in 1837.
- DuPont - DuPont was established in 1802.
- Campbell’s Soup Company - Campbell’s was founded in 1869.
- Hershey’s Company - Hershey was established in 1894.
A couple of things that separates companies that remain in business for a long time versus companies that do not are:
- They offer products and services that people want and, more importantly, need.
- They are able to change and adapt to their environment. If they see that the people do not want what they are offering, then they are trying to develop a product or service that will fulfill the customers demands.
- They have a competitive advantage over the competition. It could be a proprietary manufacturing process that allows a company to produce at an equal or greater rate as their competitor but at a lower cost.
- They put their customers above everything else. No customers equals no sales. No sales equals no business.
A lot of stock investors worry so much about the Dow Jones and Nasdaq when they should be worried about the business that they are investing in. If the business that you invested in closes its doors, then your stock is worthless irregardless of whether the Dow is up or down 100 points.
Before you start panicking about determining companies that will be around for a long time, understand that it is not as complicated as the gurus make it seem. Stop making everything so hard and keep it simple. All you really have to do is look at what products and services that you use on a daily basis. What personal hygiene products do you use all the time? Have you been using those products forever? What services do you use? Can you live without these services?
Lastly, in order to determine the company that provides the products and services that you use, simply look on the product packaging and, for services, look at your bill. There should be a company name listed on the packaging or on your bill. The next thing that you want to do is find out whether the company has stock. You can find that out by going to the company website and looking for an investors section.
Special Note: Keep in mind that your work has just begun. All you have done up to this point is find a business that may be worth investing in. You still need to research the financial statements, the industry, and the business model.