The best of the Good Companies

I am continuously asked: Of all of the Good Companies that I list on this site, which are the best?

It is likely not in your best interest to invest in all of the companies that are Good Companies (which are re-listed for you in the Watch List). That strategy will spread your investment out too much and you will not be able to spend the time necessary to truly understand the companies and their operations. Instead you should focus on 10-20 companies that you can truly understand.

The best way to pick your investments is to diversify your companies into several industry segments (banking, retail, manufacturing, etc.) and that is why the Watch List is so long. It allows you to find several companies that are well run in any given industry segment.

But what if you didn’t care about diversification (perhaps because you satisfied this need via a diversified mutual fund strategy) and you just wanted the best of the best?

The Confident Investor Rating is a continuous integer rating scale. I break up that scale for this site into 3 segments: Poor, Fair, and Good. It is no surprise then that there are companies that are all the way at the top of that scale. The best of the Good Companies are:

  • Millicom International Cellular SA (USA) [stckqut]MICC[/stckqut]
  • Volterra Semiconductor Corporation [stckqut]VLTR[/stckqut]
  • Capital One Financial Corp. [stckqut]COF[/stckqut]
  • Image Sensing Systems, Inc. [stckqut]ISNS[/stckqut]

I think that every portfolio should include these 4 companies. They have consistently grown their EBIT, P/E, EPS and revenue over the last decade. They are simply excellent companies that score 10-20% higher than any other company on the Confident Investor Rating scale.

To be clear, Millicom and Voltera currently have a perfect score on the CIR scale and they are the only 2 companies that I am aware of that currently have that high of a score! Capital One and Image Sensing Systems are the only 2 companies that are currently one level below that perfect score. There are approximately 15 companies that make the next level after that.

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