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.com, Inc. (NASDAQ:AMZN)’s 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 & Noble, Inc. (NYSE:BKS), Wal-Mart Stores, Inc. (NYSE:WMT), and Best Buy Co., Inc. (NYSE:BBY) 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 Inc. (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 Inc. (NASDAQ:AAPL) 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.