3 Stocks Following in Apple's Footsteps
Steve Jobs' biography has just hit the shelves, and already it's delivering important insights into the man and how he ran his business, insights that can help investors like us know which companies might be able to follow in Apple's (NAS: AAPL) incredibly successful and profitable path.
One of the best observations so far is Jobs' statement that too many companies, distracted by success, neglect their products in an all-consuming pursuit of revenue growth. He identified Apple's ability to stay focused on its products as the key to the company's success.
Following are three more companies that, Apple style, still focused on the product and leave the profit to follow dutifully along.
1. Costco (NAS: COST)
Costco doesn't physically manufacture anything on its own, but, in the best tradition of Apple, it knows what to focus its energies on. Costco strives to deliver unusually competent, friendly service to its customers and is known for offering the best prices on the planet.
And the company focuses on this "product" at the expense of what could easily be better revenue if it just upped its margins a bit, or paid staff less. For the most recent quarter, Costco's revenue grew by 16.8% over the same quarter last year, easily beating Target's 4.6% and Wal-Mart's 5.4%.
Costco dogmatically keeps a low ceiling on its margins, thus keeping prices low, and pays its staff better than the competition, keeping them happy and motivated. All of this put together makes Costco's product better than the competition. The company knows this and focuses wisely on it, and the market is responding with significant growth.
2. Amazon.com (NAS: AMZN)
Amazon.com is another company that doesn't physically manufacture anything but clearly knows what to focus its energies on. Amazon provides fast, efficient service and delivery to its customers on a world of products. Ordering, especially with its One Click function, is astonishingly easy. And returns or exchanges are rarely a hassle. Amazon even pays the return shipping.
Looking at revenue growth for the last quarter over last year's numbers, Amazon's 43.9% trounced Barnes & Noble's (NYS: BKS) sickly 1.6% and eBay's normally enviable 31.8%. And Amazon's not slowing down. As part of its Prime service, which provides unlimited two-day free shipping for $79.99 per year, the company now provides video streaming. With this move, Amazon has set industry leader Netflix (NAS: NFLX) squarely in its sights.
Since it first opened its virtual doors back in 1995, Amazon has never strayed from its core product of quickly and efficiently delivering the world to its customers' doorsteps. The company's astounding rate of growth is simple testament to this.
3. Starbucks (NAS: SBUX)
After rocketing from local obscurity to national ubiquity, people worried that everybody's favorite coffee shop lost its focus on product and had to go through a crucible to get it back. On its rise to the top, Starbucks delivered great coffee, spot-on service, and a coffee-shop atmosphere unlike Americans had ever known before. The "Starbucks experience," of which the coffee itself was only a part, was the company's product.
But after the departure of CEO and founder Howard Schultz, things went awry. In the quest for world coffee-shop domination and revenue growth, there suddenly seemed to be a Starbucks on every corner, and the brand lost some of its cachet as a result. Service in the shops noticeably deteriorated, too, along with the quality of the coffee.
When Schultz returned he closed stores, added new products, and raised the bar for service back to where it belonged. Starbucks eventually returned to greatness as a company, and as a stock, by focusing on what got it there in the first place.
For the most recent quarter, revenue grew at a very healthy 12.5%, versus Dunkin' Donuts' 4.40%. Welcome back to the house that Apple built, Starbucks.
Steve Jobs' greatest legacy -- a lesson for all
In another quote from his recently released biography, Jobs said that the product focus he so thoroughly ingrained in the company would, even more than any single product, be his greatest legacy.
It's worked out brilliantly for Apple, and it's working out very well for the three companies I've mentioned. Of course, these aren't the only great-performing stocks in the market. Our Foolish analysts have identified five more they believe will maintain their edge and outperform over the long term. Learn more in this free report, "5 Stocks The Motley Fool Owns--And You Should Too." Get your copy while it's still available while it's still available.
At the time this article was published At one point, Fool contributor John Grgurich had to put profit before product and turn off Amazon's bank-account-draining One Click ordering. Also, he owns no shares of any of the companies mentioned above. The Motley Fool owns shares of Apple, Starbucks, Costco Wholesale, and Wal-Mart Stores. Motley Fool newsletter services have recommended buying shares of Costco Wholesale, Starbucks, eBay, Apple, Amazon.com, Netflix, and Wal-Mart Stores, creating a bull call spread position in Apple, and creating a diagonal call position in Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 scintillating disclosure policy.
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