Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

The 10 Best American Companies: Part 1 – Colgate-Palmolive Company (CL), Costco Wholesale Corporation (COST), Google Inc. (GOOG)

There are many American companies that have made a good impression on me as of recently, but there are a select few that separated themselves from the pack. This will be the first post of a short series explaining why I believe these ten companies are positioned for success.

Colgate-Palmolive Company (NYSE:CL) is most commonly known for its Colgate-Palmolive Company (NYSE:CL) brand of oral hygiene products, but the company owns forty brands that reach consumers in over 200 countries. The company shows tremendous loyalty as over a quarter of its 40,000 employees have been employed there for over twenty years. More than loyalty, the company shows incredibly consistency as it has distributed annual dividends for 117 years, with dividend increases for the last 49 consecutive years.

Colgate-Palmolive Company (NYSE:CL)

Colgate-Palmolive Company (NYSE:CL) currently shows a market cap of $53.5 billion and a Free Cash Flow (FCF) yield of 4.9%. In 2012, revenues topped $17 billion with a gross margin of over 58%. The company’s Earnings Per Share (EPS) are another reminder of their consistency, increasing eight of the past ten years. One of the decreases would hardly be considered that, as it fell from 4.37 to 4.31 from 2009-2010. While Colgate-Palmolive Company (NYSE:CL)’s industry may not be booming, the company is very consistent, as well as strong employee satisfaction.

Google Inc. (NASDAQ:GOOG)’s mission is to organize the world’s information and make it universally accessible and useful. According to LinkedIn data, Google Inc. (NASDAQ:GOOG) is now the most desired employer in the world. Have you ever been at work and had an un-dying urge to work on something that actually interested you? Google Inc. (NASDAQ:GOOG)’s forward thinking “20% time” policy allows employees to work on projects of personal interest a fifth of the time. Google Inc. (NASDAQ:GOOG) currently owns the most popular search engine (Google), email (Gmail), mobile operating system (Android), and video website (YouTube) in the world. Let’s look at some figures to see how they stack up.

In the past decade, Google Inc. (NASDAQ:GOOG)’s revenues have increased over 3,400% as its gross margins have increased from 57.3% to 58.9%. The company boasts a market cap of $267.8 billion and a FCF yield of 5%. Warren Buffett has often talked about comparing a company’s Return on Equity (ROE) with its Return on Invested Capital (ROIC). He wants those figures as close to each other as possible – Google Inc. (NASDAQ:GOOG)’s ROE has identically matched its ROIC for five of the past ten years, with the other five years all within 2% of each other. This, along with a decade of consecutive increases in EPS, should make Buffett-like investors happy.

As Daniel Ferry points out, Costco Wholesale Corporation (NASDAQ:COST)’s membership fees make up approximately 2% of its approximate $99.1 billion in revenue, but membership fees essentially make up all of the company’s earnings. I’m starting to notice a trend among these companies of employee satisfaction as Costco Wholesale Corporation (NASDAQ:COST) pays its average employee 42% more than the average Wal-Mart Sam’s Club warehouse employee. With one of the lowest employee turnover rates in the industry, research from the Slate has shown that cashiers will average $40,000/year after working for Costco Wholesale Corporation (NASDAQ:COST) for just five years.

Low cost items (leading to low margins), have proven successful for Costco Wholesale Corporation (NASDAQ:COST) as the company’s revenues increased 233% since 2003. In that same period of time, the company has practically tripled the return of the S&P 500 growing over 250% as opposed to just over 84%.  Yes, the company only shows gross margins of 12.4%, but its EPS have risen nine of the past ten years, from $1.53 to $3.89. Again, the company’s ROE and ROIC are steady with each other, though not as steady as Google Inc. (NASDAQ:GOOG)’s.

Below is a chart comparing these three companies to the S&P 500’s performance over the past five years.

COST data by YCharts

The Foolish Bottom Line…

Colgate-Palmolive Company (NYSE:CL), Google Inc. (NASDAQ:GOOG), and Costco Wholesale Corporation (NASDAQ:COST) have all done tremendous jobs of growing their companies, treating employees well, and showing consistency to investors. They all offer great opportunities for customers and employees, but they also manage to make money and keep shareholders happy at the same time. In my opinion, these are all companies that should be considered “buys” by investors, and are surely three of the top companies in America.

Reminder: Check back for the next two posts with the remaining seven companies that I consider the top ten in America.

The article The 10 Best American Companies: Part 1 originally appeared on and is written by Tyler Wofford.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.