WAL MART (WMT), AN INDUSTRY LEADER

Wal-Mart is a true leader in the retail industry and fits all of the criteria that make a company an industry leader. Wal-Mart has a competitive moat around its business, controls the largest percent of the market in its industry, has a long history of steadily increasing its dividend year after year, has little to no competition in its industry, is the lowest-costs producer in its industry, has a strong brand name, produces steadily increasing amounts of cash-flow, produces steady revenue/earnings growth year after year, has little to no debt, its business is growing all over the world, and Wal-Mart always keeps a large amount of cash on its balance sheet. I will go over each of these criteria and why Wal-Mart fits all of these criteria.

Wal-Mart's competitive moat around its business? Wal-Mart is so large in the retail industry that its massive distribution network and it massive economy-of-scale operations give Wal-Mart a competitive moat around its business. There is no retail company that can sell goods as cheap as Wal-Mart can because Wal-Mart's distribution network is so massive and efficient it is simply impossible for any retail company to compete with Wal-Mart on price.

Wal-Mart's market share? Wal-Mart's market share in the U.S. retail industry was 11.5% in 2009, by far having the largest share of the market in the U.S. retail industry. Wal-Mart also dominates the world in sales. Wal-Mart's sales exceeded the combined sales of the second, third, and fourth largest retailers in 2010. The second, third and fourth largest retailers being Carrefour Group of France, the Kroger Company, and Metro AG of Germany.

Wal-Mart's dividend history? Wal-Mart has a very long history of increasing its dividend year after year. Indeed, Wal-Mart has increased its dividend steadily every year for the past 35 years and increased its dividend 16% a year during the last 5 years, as of 2010.

Wal-Mart's competition? Wal-Mart has little to no competition in the retail industry due to its massive size, massive distribution network, and its massive economy-of-scale operations.

Wal-Mart, the lowest-costs producer in its industry? This goes hand in hand with Wal-Mart's massive size. Having a massive size, massive distribution network, extremely efficient operations, and its massive economy-of-scale operations allows Wal-Mart to be able to buy their supplies at very low prices, which then allow them to sell at extremely low prices compared to the rest of the retail industry.

Wal-Mart, a strong brand name? Wal-Mart's brand name is very strong all over the world. Practically any person in the world knows the name Wal-Mart and practically any person in America either shops at Wal-Mart or has shopped at Wal-Mart.

Wal-Mart's steadily increasing revenues, cash-flow and earnings? Wal-Mart has steadily increased it revenues, cash-flow and earnings every year since its inception. Just during the last 5 years Wal-Mart's sales grew by 7.5% a year and its earnings/cash-flow grew by 15% a year, as of 2010. This is excellent growth considering the fact that 2006 to 2010 was during the worst recession since the Great Depression.

Wal-Mart's debt? Wal-Mart carries some debt but it is a very small amount relative to Wal-Mart's massive revenues, earnings, and cash balance. Wal-Mart's total debt was $49 billion and its debt/equity ratio was 0.76 in 2010. This is very manageable debt considering Wal-Mart produces yearly revenues of $410 billion, yearly cash flow of $27 billion, and yearly earnings of $15 billion. Also, Wal-Mart holds $10.2 billion of cash on its balance sheet.

Wal-Mart, expanding worldwide? Wal-Mart continues expanding all over the world. As of 2010 Wal-Mart operated a little over 4,100 stores in the U.S., 43 stores in Argentina, 434 stores in Brazil, 320 stores in Canada, 370 stores in Japan, 370 stores in the U.K., 250 stores in Chile, 280 stores in China, almost 60 stores in Puerto Rico, nearly 60 stores in Nicaragua, nearly 1,500 stores in Mexico, 170 stores in Costa Rica, about 80 stores in El Salvador, almost 170 stores in Guatemala, nearly 60 stores in Honduras, and 1 store in India. Wal-Mart still has a lot of room for growth in the countries it operates in and the countries that it doesn't operate in.

Wal-Marts meets all of the criteria for being a company that is a leader in its industry. This makes Wal-Mart an excellent long-term investment that can build a significant amount of wealth for any person that steadily invest in Wal-Mart year after year.

Microsoft Corporation (MSFT), An Industry Leader

Microsoft Corporation is truly a leader in its industry and an excellent investment for building wealth. And the great thing about building wealth through investing in Microsoft Corporation is that anyone can do it. Does Microsoft Corporation meet all of the criteria that I created which determines if a company really is a leader in its industry? Lets see.

Does Microsoft have a competitive moat around its business? Yes, Microsoft Corporation's most profitable product and the product that produces the largest amount is its Windows Operation System. Microsoft still has a monopoly in OS market, controling about 92% of the OS market in 2010. It is very difficult for any company to compete with Microsoft Corporation in the OS market because
Microsoft has a monopoly position in a market that only works well with a company that creates a monopoly position. The OS market must be monopolized because all computers must have a central operation system that is compatible with all other software created. Microsoft Corporation took the monopoly position before any other company did so Microsoft will contine to have a monopoly position in the OS market.

Does Microsoft Corporation control the largest percent of the market in its industry? Yes, this questioned has been answered. Mircrosoft Corp. controls about 92% of the OS market and about 89% of computer manufacturers in 2010 are planning to use Microsoft's newest OS, Windows 7.

Does Microsoft Corp. have a long history of steadily increasing its dividend year after year? Yes, Microsoft Corp. started paying a dividend to its shareholders in 2003. Microsoft's first quarterly dividend was $0.08 a share paid to shareholders on Feb. 19, 2003. Also, Microsoft also paid its shareholders a special dividend of $3.08 on Nov. 15, 2004. Microsoft's quarterly dividend was $0.16 a share on Sept. 21, 2010, which was an increase of 23% from its prior quarterly dividend of $0.13 a share. So from 2003 to 2010 Microsoft increased its quarterly dividend by 100%, from $0.08 a share to $0.16 a share. That represents yearly dividend growth of nearly 15% from 2003 to 2010. That is excellent dividend growth. Microsoft is truly a dividend achiever.

Does Microsoft Corp. have little to no competition in its industry? Yes, Microsoft Corp. controls 92% of the OS market and the OS market is a naturally monopolized market so Microsoft will continue to keep it monopoly position in the OS market indefinately.

Is Microsoft Corp. the lowest-costs producer in its industry? Yes, but this is not a big issue for Microsoft since it has no real competition. If a company tried to take over Microsoft's it would be very difficult for the company to compete with Microsoft because most software applications are already compatible with the world's central OS, Windows. It would be very difficult indeed for a company competing with Microsoft to sell a different OS that is not compatible with any other software applications and even if a company could compete with Microsoft's OS it would be very difficult to compete on price because of Microsoft's massive economy-of-scale operations.

Does Microsoft have a strong brand name? Yes, 92% of computer users worldwide depend on Microsoft's Windows OS. This automatically gives Microsoft a dominant and very strong brand name in the software industy.

Does Microsoft Corporation produce steadily increasing revenues, cash-flow, and earnings year after year? Yes, from 2000 to 2010 Microsoft's cash-flow along with its earnings more than doubled and was $20 billion in 2010. This gave Microsoft cash flow and earnings growth of nearly 15% during that time period. Also, Microsoft's cash-flow increased steadily by 15% to 20% a year since its inception in 1986.

Does Microsoft produce steadily increasing revenues and earnings year after year? Yes, in 1990 Microsoft's revenues were $1 billion and its earnings were nearly $250 million. In 2010 Microsoft's revenues were $62 billion and its earnings were nearly $20 billion. That represents 20 year revenue growth of 6,000% and 20 year earnings growth of 8,000%. Although Microsoft Corp. is no longer growing as much as it was during the 1980's and 1990's because of its present size but Microsoft Corporation's revenue and earnings will continue to steadily grow by 10% to 15% year after year along with the growth of the PC market.

Does Microsoft Corp. have little to no debt? Yes, Microsoft Corp.'s total debt/equity ratio was only 0.11 in 2010 and its total debt was about $5.9 billion in 2010. This debt is no problem for Microsoft to service being that Microsoft produced earnings of $20 billion in 2010.

Does Microsoft always have a substantial amount of cash on its balance sheet?
Yes, Microsoft produces so much cash it doesn't know what to do with it. Microsoft produced revenues of $62 billion, earnings of $20 billion and held $37 billion in cash on its books in 2010. All of this cash that Microsoft produces each year is excellent for Microsoft shareholders because it supports increasing dividend payments and increasing share buybacks.

Is Microsoft Corporation's business steadily growing worldwide year after year?
Yes, Microsoft Corp. sold 92% of the operating systems sold worldwide in 2010.
So given Microsoft's monopoly position in teh OS market Microsoft will continue
to grow along with the worldwide PC market, which will continue growing for many
years to come due to the fact that there are still roughly $4.5 billion people
in the world that still do not have a PC. Microsoft is truly an industry leader and is an excellent builder of weatlh for any investor. Microsoft will continue steadily growing its sales and earnings by 10% to 20% a year, which meanss that Microsoft investors will continue receiving increasing dividends. Indeed, Microsoft will continue to increase its dividend payments to its shareholders by 10% to 20% along with its earnings growth.

.I profile many other companies from the Industry Leader Profile in my report "Wealth For All, A Guide To Building Wealth" in the Building Wealth Report section of the website.