As an investor, I am constantly on the hunt for what my blogging partner Ser Jing and I call “compounders.” These are companies that are able to grow their cash flows at an exponential rate by reinvesting their cash.
This is where the truly great companies stand out. They have great capital allocators at the helm who are able to reinvest their cash at high rates of return. The biggest companies in the world all seem to share this common trait.
Let’s take a look at the three largest companies in the US stock market in terms of their market capitalisation.
Growing beyond computers
Take Apple Inc (NASDAQ: AAPL) for example. It feels like a long time ago that Apple was merely a computer company.
The company which used to sell only computers pivoted to sell smartphones. This revolutionised the company and set the stage for it to become the most valuable company in the world....