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Profits, Purpose, and the Power of Admiration

Which American companies are among the best choices for long-term investors? One answer is seeking out the companies that are the most admired -- and inspired to make real innovative change.

Fortune has long released an annual list ranking "The Most Admired Companies." The 2014 list is hot off the presses. The list doesn't contain earth-shattering surprises. These household names repeatedly float to the top. However, the complexities in defining "admirable behavior" spark ideas for big-picture investing. Sparkling reputations result in great returns, and thinking long and hard about what is admirable gives us an idea of ongoing business strength.

More than just the financial metrics
Fortune's methodology weighs "nine key attributes of reputation." These include:

  • Innovation
  • People management
  • Use of corporate assets
  • Social responsibility
  • Quality of management
  • Financial soundness
  • Long-term investment
  • Quality of products/services
  • Global competitiveness .

Some of the biggest, brightest companies show up every year. Despite many investors' recent bearishness regarding investing in Apple (NASDAQ: AAPL  )  , it's No. 1 this year. It's no stranger to the top of the heap.

Internet giants (NASDAQ: AMZN  ) and Google have switched places for the Nos. 2 and 3 slots, respectively.

Berkshire Hathaway and its venerated leader Warren Buffett likely make No. 1 in the investment crowd. When Warren Buffett talks, people listen; he is a vast repository of wisdom in investing and in life. On this particular list, Berkshire came in at No. 4.

Rounding out the top-ranked companies, coffee giant Starbucks ranked No. 5.

The power of positive
Granted, each of these companies' businesses are contentious among those of us who believe in socially responsible investing. However, between their financial strength and increasingly responsible behavior, such overall admirable companies are great watchlist stocks for investors.

They can do a lot of good with their powerful businesses and growth. Their huge financial resources allow them to fire up research and development, snap up companies through acquisitions, and weather major economic downturns. They can also avoid a major value-destroyer: short-term profit-boosting. For example, many weaker, struggling companies are eventually forced to conduct mass layoffs or, worse, deliver pink slips to juice short-term profitability.

These admirable companies are increasingly seeing the light when it comes to the business-building aspect of stakeholder support and future value.

The Apple/Amazon conundrums
Apple and Amazon are particularly interesting denizens of Fortune's list.

Apple isn't been known for great worker treatment overseas and environmental initiatives. However, Apple has begun tackling some of these issues. It's starting audits of overseas factories, for example. Furthermore, just days ago CEO Tim Cook took on Apple shareholders who questioned the tech giant's sustainability plans, which include 100% green-energy usage.

Cook's angry response underlined exactly the crux of big-picture thinking: "We want to leave the world better than we found it."

Meanwhile, a problem at Amazon threatens its high ranking in Fortune's list of worthies: Worker treatment in its warehouses is increasingly hitting the public radar. Last fall, a BBC reporter infiltrated an Amazon fulfillment center and described mentally and physically taxing work. Reputation problems, particularly when it comes to employees who work the front lines, detract from business strength sooner or later.

On another level, though, Amazon's disruptive nature shows the innovative ways the massive behemoth can boost other people's hopes and dreams. Grassroots publishing through Amazon's massive digital network gives self-publishing writers a real shot without the potential barrier of publishing houses. Amazon is also working on producing more music, video, and literary content, and it's entering the art world. Fortune mentions these less publicized positives in its description of what's to admire in Amazon's business. Beneath Amazon's ruthless reputation, there is room for some big initiatives that level playing fields.

The admiration equation
Companies that merge growth, profitability, and stakeholder-friendly policies exist, but most companies are nowhere near perfect as they move in that direction.

Still, profit and purpose aren't at cross-purposes, and truly admirable companies are stretching further into these areas where traditional investors will push for short-term profits. They're increasingly making stands in these areas -- and we're all moving toward the change we want to see.

Investing is complex. Economies, individuals, and the world are living, changing organisms, and corporations must evolve or fade away.

A sea change in how managements view stakeholder friendliness is part of the admiration equation. The push for profits and purpose is turning out to be a competitive advantage.

Check back at for more of Alyce Lomax's columns on environmental, social, and governance issues.

The top of the admired leaders
There's a reason why Berkshire Hathaway shows up near the top of the "Most Admired Companies" list. Warren Buffett has made billions through his investing, and he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

Read/Post Comments (7) | Recommend This Article (10)

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 04, 2014, at 12:20 PM, damilkman wrote:

    This article confused me. Are these companies admirable because they make tons of money or admirable for how they conduct themselves in the ecosystem of the economy? Paraphrasing Guns Germs & Steel regardless of the benignness of a superior culture, when they come in contact with another there is assimilation.

    Is Starbucks a great company to be admired because they pay an honest buck to poor farmers for their coffee beans, or are they to be admired because they sell horribly unhealthy beverages for massive markups to ignorant consumers?

    Should Amazon be admired for being able to sell and ship all manner of products for cheaper? Or should they be admired for running thousands of mom & pops and scores of brick & mortar entities out of business?

    The reason for being in business is to be better then your competition and thus making more money. If you run your competition out of town or trick consumers to pay your wares for a massive markup your not shedding a tear. Why is Apple not being charitable and volunteering to sell their product for less? They still could have a significant profit.

    There are levels of nefarious and benign behavior among companies. But they all are in the business of extracting as much money as they can while running their competition out. They may take on appearances in the name of brand, but if the company survival is at stake I guarantee you that every company on the admire list will do what is necessary to survive.

  • Report this Comment On March 04, 2014, at 2:35 PM, HoosierRube wrote:

    My five are;

    1. Smith & Wesson

    2. Budweiser

    3. Phillip Morris

    4. Exelon

    5. Peabody Coal

    For providing for the 'not so rich' among us.

  • Report this Comment On March 04, 2014, at 9:05 PM, SkepikI wrote:

    ^ LOL..please stop, I can't breathe.... I picture Alyce turning purple.

  • Report this Comment On March 07, 2014, at 2:38 PM, 092326 wrote:

    We invest to improve our life style, provide for a better retirement and help our children with an education. Not for social consciousness.

  • Report this Comment On March 08, 2014, at 11:28 AM, moneytrail wrote:

    Maybe if Tim Cook's "big picture thinking" about increasingly discredited theories such as human CO2 activity causing "climate change," and his rants about acceptable Apple investor profiles were directed at recapturing Apple's innovative edge, he might be able to reverse Apple's precipitous stock value, along with his mediocre stewartship, rather than sounding like an Al Gore acolyte ready to take to the streets.

  • Report this Comment On March 08, 2014, at 12:56 PM, HoosierRube wrote:

    I'm happy to see the growing backlash against the liberal feel-good, pat me on the back for my rhetoric crowd that has infiltrated, compromised and co-opted the national discussion.

    The truth-be-damned, name calling pseudo-rich minority will get their come-uppance as the populace at large is feeling the pain and suffering at the hands of these gated-community know-it-alls.

    Tim Cook just condemmed his own company from his high perch of the gated-society populated with tyrants and self-appointed gods.

    Having inherited the richest company on the planet his inflated ego will impact the stockholders, employees and suppliers negatively while his gated community haven remains untouched.

    Time to rise up against the tyrants.

  • Report this Comment On March 08, 2014, at 7:35 PM, cmalek wrote:


    If you are implying that these five companies are "admirable" because of their "social responsibility" you could not be more wrong. All five could score a 0 on soial responsibility and still make it to the top because they score so high on the other eight criteria. Or maybe they are admired because they make money hand over fist?

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Alyce Lomax

Alyce Lomax is a columnist for specializing in environmental, social, and governance (ESG) issues and an analyst for Motley Fool One. From October 2010 through June 2015, she managed the real-money Prosocial Portfolio, which integrated socially responsible investing factors into stock analysis.

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