The Best Stocks To Buy Are The 'Best Places To Work'

by: App Economy Insights

Management, and more precisely culture, is widely recognized as an important factor in determining the long-term success of a company.

Glassdoor, a website where employees review their companies and CEOs, provides every year a view of the top 100 rated companies in the US.

After noticing some of my best-performing investments among the top ranked companies, I decided to analyze the public companies in the list.

The "best places to work" are beating the market over the years by a very significant margin.

I review what we can learn from the list and how it should impact your portfolio strategy.

Investment Thesis

The best ideas are often hidden in plain sight.

What if the companies celebrated by their employees for having the best culture and most inspiring leadership were also some of the best-performing investments in public markets, year after year?

History shows that the way employees praise their company might be a much more compelling investment factor than P/E ratios, free cash flow margins and other financial metrics.

The real question is: Are you going to do something about it?

I suspect that many investors – even after reading this article and seeing the evidence – will keep on overlooking the importance of culture and top tier management as essential criteria before making an investment decision.

After reviewing the list of companies below, I challenge you to review your own portfolio and ask yourself:

  • How many of these top-rated companies are in my portfolio?
  • What portion of my portfolio do they represent?

My hunch is that most readers will find themselves underexposed to these best-of-breed companies, despite the data supporting a large allocation to them.

Let's look closer.

Glassdoor best places to work public companies stock performance

Image Source: App Economy Insights

A word on conscious capitalism

In his book Conscious Capitalism: Liberating the Heroic Spirit of Business, John Mackey, CEO of Whole Foods Market, explains:

I realized that with everything I did from that point onward, I would have to ask myself this question: "How would I feel if what I'm doing right now is written up on the front page of the Wall Street Journal or the New York Times or if it is on television? Would I still do it?" That is a very useful exercise for leaders to engage in, because we shouldn't do anything we might be embarrassed by or ashamed of.

We live in a digital world where transparency has become a fundamental piece of our society. Our reputation follows us online, as individuals or businesses. While it can have unfortunate ramifications on privacy, the impact on accountability and the urgency for large businesses to put their best foot forward and being purpose-driven has pushed us all forward.

Companies embracing the conscious capitalism described by John Mackey are following four guiding principles:

  • Higher Purpose: A purpose beyond pure profits.
  • Stakeholder Orientation: A conscious business will concentrate on the whole business ecosystem to create and optimize value for all its stakeholders: Customers, employees, suppliers, investors, and others.
  • Conscious Leadership: Conscious leaders emphasize a "we" rather than a "me" mentality to drive the business.
  • Conscious Culture: Stronger organizations build a culture based on clearly articulated values, translated into behaviors, fostering a spirit of trust and cooperation among all stakeholders.

Image result for conscious capitalism


Wall Street is filled with quantitative analysts and algorithms trading solely based on financial metrics and price momentum. But when it comes to qualitative criteria, it's always hard to get a sense of the culture and leadership within companies around us.

This brings me to Glassdoor.

The best places to work: employees' choice

Glassdoor is a website where current and former employees anonymously review companies and their management. Once enough reviews have been submitted, companies receive a score out of five stars. Similarly, CEOs receive a score out of 100%.

Here's an example of the snapshot you can get at a company's reviews, using the top-rated company in the US as an example, Bain & Company:


The website collects reviews real salaries from employees of large companies and displays them anonymously for all members to see. In the digital world we live in, the online reputation of large companies and the accountability of management have both become immensely important.

As a result, Glassdoor is able to compile a list of the top 100 "best places to work" in the US every year based on company and CEO ratings.

You can read more about their methodology here.


As I was going through the list, I noticed a wide range of private companies, many of them in consulting, healthcare or non-profit organizations.

The public companies I identified in the list seemed to have something in common. When I recognized companies that were part of my own portfolio of individual stocks, they were all some of my best performers.

This brought me to review the market performance of the public companies listed in the top 100 best places to work on Glassdoor based on employees' feedback.

Are the best places to work beating the market?

There are 42 public companies in Glassdoor's top 100 best places to work once you exclude private companies or former public companies that have been acquired (such as LinkedIn or Ultimate Software).

I've decided to exclude two companies that have been public for only a few months, making their performance meaningless for this analysis:

  • Zoom (ZM) ranked #2, IPOd in April 2019.
  • DocuSign (DOCU) ranked #17, IPOd in April 2018.

Here are the selected top 40 public companies in Glassdoor's best places to work and their last five years' stock performance up to 5/31/2019:

- S&P 500 (SPY) 2% 14% 31% 30% 43%
7 Facebook (FB) -7% 17% 49% 121% 181%
8 Google (GOOG) 2% 14% 50% 107% 100%
9 Lululemon (LULU) 36% 243% 155% 176% 281%
10 Southwest (LUV) -7% -21% 12% 26% 78%
11 Salesforce (CRM) 17% 69% 81% 107% 189%
12 Intuitive Surgical (ISRG) 1% 357% 559% 733% 1028%
16 HubSpot (HUBS) 43% 140% 263% 246% 475%
20 Paylocity (PCTY) 68% 105% 173% 208% 415%
27 SAP (SAP) 9% 14% 52% 67% 62%
28 Delta (DAL) -5% 5% 18% 16% 26%
30 Adobe (ADBE) 9% 91% 172% 244% 319%
33 Illumina (ILMN) 13% 73% 112% 49% 93%
34 Microsoft (MSFT) 25% 77% 133% 162% 203%
36 Nvidia (NVDA) -46% -6% 190% 505% 615%
38 Intuit (INTU) 21% 74% 130% 130% 208%
42 Activision Blizzard (ATVI) -39% -27% 10% 68% 110%
43 Equity Residential (EQR) 20% 18% 11% 2% 23%
47 Clorox (CLX) 23% 10% 16% 38% 67%
49 Johnson & Johnson (JNJ) 10% 2% 16% 31% 28%
51 VMWare (VMW) 29% 82% 192% 103% 83%
55 AvalonBay (AVB) 23% 6% 13% 21% 43%
56 Boston Scientific (BSX) 26% 42% 69% 108% 198%
59 T-Mobile (TMUS) 32% 9% 72% 89% 113%
62 Paycom Software (PAYC) 101% 224% 424% 510% 1466%
63 John Deere (DE) -6% 14% 70% 51% 54%
65 Oshkosh (OSK) -2% 13% 55% 42% 32%
69 Cisco Systems (CSCO) 22% 65% 79% 78% 110%
70 Travelers (TRV) 13% 17% 28% 44% 55%
71 Apple (AAPL) -6% 15% 75% 34% 95%
75 Goldman Sachs (GS) -19% -14% 14% -12% 14%
77 Texas Instrument (TXN) -7% 28% 72% 87% 122%
79 Costco (COST) 21% 33% 61% 73% 107%
82 NetApp (NTAP) -13% 46% 132% 79% 58%
85 FedEx (FDX) -38% -20% -6% -12% 7%
87 HP (HPQ) -15% 0% 40% 22% 23%
88 Accenture (ACN) 14% 43% 50% 85% 119%
92 Expedia (EXPE) -5% -20% 3% 7% 55%
93 BOK Financials (BOKF) -26% -7% 18% 16% 18%
94 Chevron (CVX) -8% 10% 13% 11% -7%
100 Morgan Stanley (MS) -19% -3% 49% 5% 32%

Stock performance calculated via Google Finance up to 5/31/2019.

The first striking data point I noticed is that 78% of these selected best public companies have outperformed the S&P 500 over the last five years (31 out of 40).

The picture gets even more interesting if you look at the very top of the rankings: Over the last five years, all of the top 10 public places reviewed have beaten the market.

Using the last day of May 2019 as my starting point, I looked back over the last five years and compared the performance of the top 40 public companies in the rankings.

The most important caveat here is that the numbers below are averages, meaning that these companies are assumed to be equally weighted, regardless of their market capitalization.

Here are the results:

Best places to work stock performance

Chart by App Economy Insights. Stock performance from Google Finance.

While I was expecting some correlation, I am shocked by how significant it is.

Not only do companies with higher employee reviews perform significantly and consistently better than the market, they do so in a way that is beyond outstanding.

The top 10 places returned 284% in the last five years, delivering more than six times the S&P 500 returns.

The top 40 places, assuming a portfolio with equal weight between all these companies, has returned 183% over the last five years, more than four times the returns of the S&P.

Finally, no matter how you slice it, these companies have crushed the S&P 500 as a group, over one, two, three, four and five years.

If we look closer and analyze groups separately, it becomes apparent that the stock performance correlation fades once you look beyond the top 30.

Here are the results if you break down performance for top 10 companies, then companies ranked 10th to 20th, and so on:

Best places to work stock performance

Chart by App Economy Insights. Stock performance from Google Finance.

The bottom 10 public companies in the rankings - which are all in the bottom 25 companies of the top 100 if you include private companies - only marginally beat the S&P over the last five years, returning 53% (vs. 43% for the S&P).

Beyond Glassdoor

Glassdoor has the advantage of covering virtually any company out there and makes the information available publicly, but it's not the only company offering a view of businesses best ranked by their employees.

For decades, Fortune has published on an annual basis the "Fortune 100 Best Companies to Work For."

There is obviously a lot of overlap between Fortune and Glassdoor rankings, and it shows in the stock performance.

Fortune went back all the way to 1998 and demonstrated that a hypothetical equally weighted index re-balanced every year with the Fortune 100 best companies to work for would have returned more than twice the market gains over 20 years.


This makes an approach built around the best places to work all the more compelling:

  • The last 20 years include multiple credit cycles, illustrating that this performance isn't simply a result of a bull market.
  • Fortune's study also illustrates that this approach works on a forward-looking basis. By re-balancing this hypothetical portfolio every year, they stayed in tune with the times and trends.
  • This steady performance over the years counters the argument that employee satisfaction could be a mere result of stock performance. If so, you would certainly find Amazon (AMZN) or Netflix (NFLX) in these rankings today, which is not the case.

What makes employees happy at work?

When companies take care of employees, employees take care of the business. The virtuous cycle is as simple as that.

Michael C. Bush, CEO of Great Place to Work for All explains:

Business success relies on developing all your human potential [...] Every employee matters in an economy that is about connectivity, innovation, and human qualities like passion, character, and collaboration.

This four-minute TED video is a fantastic summary of a survey on employee happiness and ideas that create happy employees shared by Michael C. Bush:

Some takeaways

I like to think my portfolio is a reflection of who I am and how I see the world. After all, by being a shareholder of a company, I'm a partial owner of the business.

Are all companies in my portfolio aligned with my values? Are these companies treating their employees in a way that make them happy to go to work every single day? These are questions we should all ask ourselves at some point.

Coming to the realization that great culture can not only lead to amazing results for human capital but also for shareholders is an important step to embracing conscious capitalism.

I personally still have a lot to learn about conscious capitalism, but it compels me to look at my portfolio with a critical eye, and I hope it will help me make better investment decisions moving forward.

  • What do you think of the performance of the best places to work?
  • Does it make you look at your portfolio differently?
  • Will you consider adding companies that are praised by their employees given their market-beating performance over time?
  • What is your current portfolio allocation to companies celebrated as best places to work?

Let me know in the comments!

Disclosure: I am/we are long AAPL AMZN FB GOOG GS HUBS ILMN NFLX PAYC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.