The Fortune 500, which is an annual compilation by the magazine of the largest publicly traded companies by sales, is a prestigious club.
In 2006, the Fortune 500 collectively earned $785 billion, up 29 percent over 2005.
Earnings Drive Stock Prices
Earnings are what drive stock prices and investors were generally rewarded with many of the large company stocks.The big story was how well companies have been able to control costs while raising prices.
You don’t have to be a financial genius to see that if your revenue is rising at a faster rate than your expenses are, you have the makings of a profitable business.
We have heard a lot about the cost of energy due to soaring oil prices, however labor costs are a huge part of most company’s expenses.
Fortune points out that thanks to modest labor increases and big productivity gains, companies have kept the relative cost of labor increases below rising prices.
Large-Cap Stocks
While small and mid-cap stocks will have their moments in the spotlight, the reality is that a large company has a much better chance to leverage its advantage in the global marketplace.
If you would like to see the whole Fortune 500 list, click here.
