The 11 Dominant Companies of the Past 86 Years

In recent weeks, Apple (Nasdaq: AAPL  ) has firmly established its market capitalization leadership among the companies of the S&P 500. It has surged past ExxonMobil (NYSE: XOM  ) into the No. 1 position by a considerable margin. Surprisingly, the crowning of a new market cap leader is far more unusual than you might think.

There have been only 11 distinct leaders since 1926, which makes the emergence of a new one about as frequent as an American war (we've had around 10 of those since then, by my count). What can we learn from these remarkable companies that have been able to win admittance to this exclusive club? And can those lessons help us identify the visionary companies of tomorrow?

Mt. Olympus for large caps
Below are the 11 market cap leaders of the past 86 years:

Company

Industry

Current Market Cap

(numbers in billions)

Apple Personal computers $497
ExxonMobil Major integrated oil and gas $410
Microsoft Application software $267
IBM (NYSE: IBM  ) Diversified computer systems $233
Wal-Mart Discount, variety stores $204
General Electric (NYSE: GE  ) Diversified machinery $200
AT&T Telecom services $184
Cisco Networking and communications $106
Altria (NYSE: MO  ) Cigarettes $62
DuPont Chemicals $47
General Motors Auto manufacture $41

List of companies from S&P Capital IQ. Industry and market cap info from Yahoo! Finance.

And here are three quick takeaways from considering the companies in this group:

1. Market cap leaders transform our society. In Built to Last, Jim Collins and Jerry Porras argue that great companies "have woven themselves into the very fabric of society." This is clearly true of each of the firms on this list. General Electric was a pioneer in the field of electricity, while General Motors was one of the early producers of automobiles, and both those developments greatly transformed American society. The next market cap leader -- and one will replace Apple -- will most likely be a company that is changing our world in big, meaningful ways. Will that company be a leader in search? In social networking?

2. Market cap leaders endure. One of the most fascinating things about this pantheon of companies is that all of them remain extremely relevant today. Most of these companies have been around for a very long time, and I suspect all of them will still be going strong over the long term. Clearly, there must be more to becoming a market cap leader than just being in the right place at the right time. These companies have built effective organizations that allow them to grow and respond to changing market conditions. It would not surprise me at all if ExxonMobil, for example, returned to market cap leadership sometime soon and held onto it for another decade or so.

3. Market cap leaders have great cultures. It's striking to me how many of these companies have strong, distinct cultures. Apple, of course, works very hard to preserve the start-up ethos in everything it does. GE, on the other hand, is all about learning, excellence, and sharp elbows. And throughout much of its history, IBM has been the prototypical corporate culture that sets itself apart from its competitors. In a recent tweet, Motley Fool CEO Tom Gardner said that "most investors don't care about internal culture ... which is why most investors lose to the market."

Who's next?
So who will be the next market cap leader after Apple? Apart from ExxonMobil returning to the No. 1 slot, I think the next leader will have all three attributes from above. And that company may not even seem likely at the moment. How many of you honestly felt Apple, with its market cap of $36 billion in August 2005, would become market cap leader a mere seven years later?

I wouldn't be surprised to see Google as the next market cap leader someday. It's a company with a great culture that is transforming our world in many interesting ways. More controversially, I could see Facebook becoming the dominant company in a decade or so. Its incredible network provides it with possibilities that challenge the imagination at this point. I believe the next market cap leader is in our midst, though we may not recognize it until it becomes obvious.

Our analysts are always looking for great companies that will benefit from the big trends reshaping our environment. One such company -- a Latin American retailer that has many of the same attributes as Costco -- looks so promising that we've dubbed it The Top Stock for 2012. To learn more, have a look at the free report.

John Reeves owns shares of Apple, Google, and Costco. You can follow him on Twitter, where he goes by @TMFBane.

The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of ExxonMobil and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (18) | Recommend This Article (49)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 08, 2012, at 5:21 PM, xetn wrote:

    Your guess on American wars is a little off. However, for the sake of ease here is a list of "US Wars"

    http://www.historyguy.com/american_military_history.html#.T1...

  • Report this Comment On March 08, 2012, at 5:27 PM, kinosternon wrote:

    Who's # 12 (the real #11)? GM shouldn't be on that list. They represent all that's bad with... The reason they accepted the bailout money and became Government Motors was because they've been run by a bunch of lily-livered, spineless, C-level execs that were afraid to stand up to the unions so they just kept paying them more and more until they became a pension fund that made an occasional car. Now? They don't even know what they are. Apologies if I've ruffled anyone's feathers... GM ruffles mine.

  • Report this Comment On March 08, 2012, at 5:42 PM, bretco wrote:

    I respectfully disagree with part of the premises put forth; AT&T is not the same company noted , it is a BabyBell that ate its mother; When it was the orginal, the culture was hardly commendable.

    Anybody remember all the "bell-heads" ?

    Altria is a spin-off with lots of notoriety

    and who would suggest that anyone of these 3,

    General Motors especially, has a "culture" that was/is/ should be respected ?

    Maybe you meant "kulture" for these 3 ?

  • Report this Comment On March 08, 2012, at 6:35 PM, sikiliza wrote:

    Interesting article - Brings to mind Whitney Tilson's Motley Fool article from October 2000 - http://www.fool.com/boringport/2000/boringport001023.htm

    He reckoned that Cisco could ultimately hit 1.3Trillion in market valuation on a best case basis. How the mighty have fallen - Cisco now boats a market cap of $106B - not sexy anymore.

    Better still from a February 2000 wired.com article - "Credit Suisse First Boston analyst Paul Weinstein called Cisco "potentially the first trillion-dollar market cap company." Cisco, based in San Jose, California, trails only Microsoft in market cap. The personal computer software maker was down 1/2 at 109-7/16, putting its market value at $568 billion."

    And today we marvel at Apple's market cap - I think the good old roaring late 90s are back again and now they come with a Facebook "Like" button to boot.

  • Report this Comment On March 08, 2012, at 6:36 PM, dangrzn wrote:

    I can't believe you left Boeing off this list. It certainly deserves to be on there ahead of some of the others. For one it has never been "saved" by the US citizens from bankruptcy.

  • Report this Comment On March 08, 2012, at 6:57 PM, Sunny7039 wrote:

    I agree. To see GM on this list, with no explanation -- and to put it in the same group as the others with respect to "enduring"-- is ridiculous. This author must be counting on phenomenally short memories.

  • Report this Comment On March 08, 2012, at 7:38 PM, wjcoffman wrote:

    While you may be entirely correct offering that search or social networking may be next I certainly hope not. Each of the 11 have tangible products which they've woven into society, arguably to the benefit of society. I fail to see the benefit of social networking unless you're data mining personal information for profit.

  • Report this Comment On March 08, 2012, at 7:55 PM, TMFBane wrote:

    Thanks for all of your comments, everyone! I find this to be a very fascinating topic.

    Just one clarification -- I didn't choose this list. It came from the S&P itself -- these are the 11 companies that have been market cap leaders at one point or another since 1926. It seemed remarkable to me that there were only 11 such companies since that time, so that was the premise of the article.

    Now does GM count as enduring? That's a fair point seeing as it just barely survived the financial crisis and resulting downturn. And some might say that GE just barely survived as well.

    Ultimately, both are still in the game after long and illustrious histories. And I think we can learn a ton by studying them.

  • Report this Comment On March 08, 2012, at 8:39 PM, jm7700229 wrote:

    It's a list of Cap leaders. GM qualifies, regardless of subsequent events. And they are again, if one counts their share of the output of their joint venture in China, the largest producer of automobiles in the world.

    As for Apple, I don't think they have any staying power. They need an annual blockbuster to keep going at all, since they use mostly existing technology to do new stuff. It's cool and ingenious, but does not leave them with any moat other than what they derive from being cool and ingenious. They don't actually make anything. That's the reason their P/E stays so low: the "E" part might not be there in a couple years.

  • Report this Comment On March 08, 2012, at 10:30 PM, bfsteck wrote:

    coca cola

  • Report this Comment On March 08, 2012, at 11:27 PM, mikecart1 wrote:

    #12 could be MSFT. People seem to think MSFT is dead. But is can easily double in price from $32+ now in the next few years from new revenue streams and new products. A hit video game machine or a hit XYZ product can make is soar. Apple won't be king as long as the others since Steve Jobs is gone. XOM could go up also obviously but that is too easy to guess.

    My guess is MSFT at $70/share within 5 years!

    :)

  • Report this Comment On March 09, 2012, at 9:08 AM, tomsutc wrote:

    "Apple, of course, works very hard to preserve the start-up ethos in everything it does."

    This is totally not true - having worked at startup, you rush-rush-rush to push something out the door. Bugs, blemishes, and sometimes usability be damned. Then it gets refined over time to be better and better. Apple is quite the opposite - it makes sure that everything is polished, beautiful, and "magical" before anybody in the public gets a eye on it.

    I know someone who works at Apple, and from what I hear, their culture is more like that of a government defense contractor: siloed departments, every door has an RFID-badge reader, and only discussing products with people who "need to know."

  • Report this Comment On March 09, 2012, at 9:37 AM, etord wrote:

    Ity would have been helpful if you noted the years in which these were market cap leaders. Of course, a major part oft he point is that some leaders do fall, leaders do lose the culture that put them there. The fact that GM is not what it was, and neither is ATT or for that matter IBM. Phillip Morris is trying to remake itself as Altria, will it succeed? And while Microsoft is arguably the same company it was, someone buying it when it was market cap leader might have lost a very large percentage of their investment.

  • Report this Comment On March 09, 2012, at 9:59 AM, opeongo wrote:

    If there is a "right size", I would be interested in knowing Fool's take on that might be.

  • Report this Comment On March 09, 2012, at 9:59 AM, petrogold wrote:

    FB expanded so fast. What position it has got? Will it sustain the growth in the next decade? or will do like myspace etc.

    We feel some new giant will emerge that we could not percieve at current situation. From China, India, Brazil new origins will be . Guess who?

  • Report this Comment On March 09, 2012, at 10:14 AM, BradfordP wrote:

    How can GM be on your list when the former GM who was around low those many years went bankrupt because they didn't make the adjustments which you proclaim for successful companies?

    I recognize your listing of Apple and Altria, but Apple's recent disclosure that they contract with companies in China in circumstances that almost sound like slave labor and Altrias dealing in the death industry give one pause if you consider investments should be ethical.

  • Report this Comment On March 09, 2012, at 12:37 PM, bretco wrote:

    Why aren't more responders considering AT&T as an invalid addition to the list ? Sure, they were there [on the list]once upon a time but the AT&T of today is a completely different company than the one that was a big dog back in the day.

  • Report this Comment On March 09, 2012, at 4:36 PM, thistimeforsure wrote:

    no, AT&T, Altria and GM were never at the top of the valuation list, they are different equities now than their predecessors were. The equities by these names which were at the top of the list are gone today and a certificate of thier stock from the time of their leadership has little or no value.

    Your lumping of GE and GM together is false as well. GE, never had a loss quarter, never had it's stockholders' equity drop by more than a few percent, while GM had $Billions of negative stockholders equity and eventually disappeared.

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