July 9, 2012
The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.
Blogger and Princeton student Evan Soltas made an interesting observation that innovative, nimble, capital-light companies have been able to get to scale faster with fewer employees. There are a few things that investors can take away from this insight. First, our digital world has changed the way companies operate. And second, identifying promising young companies today can have a big payoff tomorrow. David thinks this makes a strong case for disruptive companies like networking equipment maker Infinera. It took on the big boys as a tiny company, has made lots of progress, and is about to make lots more. There’s are lots of other examples, too. Westport Innovations in transportation. LinkedIn in career management. Look at what Chipotle did in the restaurant business! David's favorite small-cap company right now has all the key elements of a transformational company. The MEMS designer is innovative as it created a new, smaller form factor for its devices. It’s nimble as it has been putting money back into R&D to go after new markets. And it has a capital-light business model that brings in tons of cash. Best of all, it’s definitely a buy at today’s prices.
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