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Profit Machines: Why Large Companies Are Your Portfolio’s Best Friend.
What is the fuss?
Many investing veterans advise looking at a company’s net profit (or cash flows). A company that turns profits and grows over time is the one to invest in.
There are listed startups that are in losses and promise to turn profitable in 5–10 years' time.
Then there are small-cap stocks with tiny-weeny profits and the dream of making it big someday.
Then there are large-cap companies with erratic profits, sometimes positive, sometimes negative.
And then, finally, there are profit-generating behemoths, generating billions of dollars of profits annually.
This large cash pile, if efficiently deployed, can help in acquisitions, business expansion, investing in marketing, R&D, and cost-cut competitors.
While some investors stay away from these behemoths, naming them as slow-moving giants giving average returns, I LOVE them! ❤️
And I have five solid reasons for them.
Before I delve into these five reasons, let's take a look at examples of five such behemoths in the listed space in India.