The Easiest Way To Find Great Companies To Invest In

invest in what you knowThinking and finding companies to invest in can be hard.  That’s why I wanted to share with you the best way to find great companies that you can invest in right now.  It doesn’t require diligent research; it doesn’t require vast investment knowledge; and it doesn’t require any special skills.  All it requires is a little awareness of what you do everyday.

And the trick is?

 

Invest In Companies You Are a Customer Of!

Think about it.  What products or services do you buy on a regular basis?  Why do you buy those products?  Are you a regular user of them?  Are you addicted to them?

Chances are, these are going to be great companies behind these great products.

Just think about what you spend your money on:

Consumer Goods

Do you buy diapers, cleaning supplies, bath tissue, toothbrushes?  Everybody does, and they do it regularly.  That is what makes these companies great:

Clorox Corporation (CLX) - The maker of the most popular bleach, but also a myriad of other housewares and accessories items.

Kimberly-Clark Corporation (KMB) - The maker of most paper products for the home, such as toilet tissue and paper towels, as well as other personal products.

Procter & Gamble (PG) - A large conglomerate of personal care products make up this company’s portfolio.

Johnson & Johnson (JNJ) – The most well known maker of baby care products, as well as over the counter pharmaceuticals

 

Food/Beverage

Everyone likes to eat, drink, and be merry, especially during this time of the year.  As a result, most people are familiar with these popular food and beverage companies, or at least their products:

Coca-Cola (KO) - One of the most famous corporations in the world, the maker of Coca Cola and hundreds of other beverages has been a great investment for many years.

Pepsico, Inc. (PEP) - The largest competitor to Coca Cola, Pepsi has also been growing, but in slightly different sectors than Coke.

Hansen Natural Corporation (HANS) – The maker of more alternative and natural beverages, this company has delivered solid profitability for several years.

Diageo PLC (DEO) - Most adults enjoy spirits every now and then, and this maker of distilled beverages is behind most of the brands you know and love.

 

This was just a small sample.  There are many more companies that you know and use – like insurance, utilities, banks, shops, and more.

 

The Most Profitable Companies in the World

When looking for great companies, just look at this list of the most profitable companies in the world:

  1. Exxon Mobile
  2. AT&T
  3. Chevron
  4. Microsoft
  5. J.P. Morgan Chase & Co.
  6. Wal-Mart
  7. IBM
  8. Apple
  9. Johnson & Johnson
  10. Berkshire Hathaway

What do all these companies have in common?  They have great products that consumers know, love, or have to use (like insurance and gasoline).

 

Don’t Reinvent The Wheel

When it comes to investing, don’t reinvent the wheel.  That is how you get burned.  Speculative stocks and high flyers can be fun to watch, but they are probably not great long term investments.

The best long term investments are ones that are tried and true, have proven products that you know and use, and they trap customers into staying – either via loyalty or monopoly.

Just look at the list above…I’m sure you recognize every company on it – not just for their name, but also for the product they sell.

What companies do you use AND invest in?

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  • http://worksavelive.com Jason @ WorkSaveLive

    Those are definitely some great large-cap companies! I’ve avoided investing in individual stocks, just because I’d prefer to have more small-cap and international in my portfolio. When it comes to those types of sectors, it’s not as easy to pick out the big names or products that you use on a daily basis.

    • http://thecollegeinvestor.com Robert

      But many industrials still have an impact on your life. Their products are usually harder to link back to them, but you probably use many of them everyday.

  • http://www.frugalrules.com John S @ Frugal Rules

    Great post. It sort of follows Buffett’s philosophy of buying what you know. I like your tip on not reinventing the wheel. I think a lot of people want to find that “next big stock” or chase penny stocks. Many do this without a lot of research. There are many companies out there that bring a handsome return that we all use every day. It can be a great way for those who know little about the market to invest in something solid. If you don’t want to invest in individual stocks, then there are a few good EFT’s/Mutual Funds out there that group these companies together.

    • http://thecollegeinvestor.com Robert

      Great point on there being ETFs that invest in these same companies. A little diversification does a portfolio good! Any ones you know off the top of your head?

  • http://thomassmoore.com Thomas S. Moore

    My fav is investing in companies that you believe in and use. My wife loves coach and tiffany so I told her to stop buying the product and buy the stocks instead. I still say make sure you do the research and follow the company as much as possible.

  • http://www.brickbybrickinvesting.com Brick By Brick Investing | Marvin

    Great point. Don’t reinvent the wheel. Investing isn’t as hard as people make it out to be. Buy the largest and best companies then sit back and relax as your money increases!

  • http://www.insiderrealestatetips.com Dominique Brown

    Great point, I definitely agree with you that it is much better to invest in companies that you are a customer of. I prefer long term investments which is why I try to stay away from speculative stocks. A few of my favorite companies that I have invested on are Procter & Gamble, Kellogg & Kraft Foods.

  • http://7minentrepreneur.com Joe Cassandra

    Hi Robert,Just found your site!
    Definitely like the Buffett philosophy of buying who you know, I also like Peter Lynch’s advice in actively looking for new places where you WILL become a customer and start early investing in them, then you get the 10+ baggers.

    Look forward to reading more Robert! Cheers!

  • http://www.libertyinvesting.com Aram Durphy

    This is a great way to screen for stock ideas, but it is the first step in an in-depth process. If you want to wade into individual stocks, be sure you understand the fundamentals of each company and its relative value. And always diversity, diversify, diversify. Even your favorite consumer company with a great balance sheet and a low P/E may fall on hard times. Another good Peter Lynch quote: “In this business, if you’re good, you’re right six times out of 10. You’re never going to be right nine times out of 10.”

  • http://mypenniesmythoughts.com/ Janine

    This is a really great article! Simple advice that definitely works.