In this article we discuss the 5 most profitable US companies in 2021. If you want to read our detailed analysis of these profitable businesses, go directly to the 10 Most Profitable US Companies in 2021.
5. Accounting Business
Corporations as well as entrepreneurs alike utilize one or more of several accounting methods in order to run their daily operations as well as calculate taxes. However, many businesses and entrepreneurs do not hire in-house accountants. They instead outsource their accounting and finance departments to accounting firms or use freelance accountants and tax advisors. As accounting requires both vast knowledge and skill, as well as attention-to-detail, the accounting business has a great demand in the United States. As existing businesses grow, and new startups emerge, the demand for accounting services in the United States rises even higher.
The Big Four accounting firms — Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY), and KPMG — had a combined revenue of $157 billion in 2020. The forecasted revenue earned by accounting businesses in 2021 is $107.6 billion. The accounting business has highly competing companies as well as high barriers to entry in the form of both qualification and licenses to practice. Accounting firms must be well-known and reliable to be used by corporations, as audit and accounts must be accurate for all the stakeholders of the companies to be satisfied. Although the market size of accounting businesses has grown by a low average value of 0.1 % annually, the industry will continue to be one of the most profitable in the United States.
4. Legal Services Business
The legal industry is indispensable across many personal and professional sectors. Similar to accountants and accounting firms, lawyers, attorneys, and law firms are significant for both business and individuals. The range of services they offer, however, are much wider than that of accounting firms. Firms may deal with services such as constitutional law, corporate law, criminal law, family law, property and intellectual property law, employment and union law, and personal injury law. It is hence no secret that lawyers are some of the most sought-after people in the United States. Therefore, lawyers and law firms are employed by all kinds of individuals, corporations, and institutions in the United States.
The market size in terms of revenue for legal services in the United States for the year 2021 is $319.7 billion, making it the most profitable business in the US. The growth rate for law firms annually has been 0.8% on average. Although lucrative, the legal services industry has extremely high barriers to entry, as attorneys must have an undergraduate degree, attend law school, and then pass the bar exam of one of the states. Moreover, attorneys usually specialize in a specific field of the law, hence law firms must hire different specialists to cater to different customers.
3. Healthcare Business
Since the COVID-19 pandemic in 2020, the healthcare business experienced a drastic boost. With the virus affecting people of all ages and conditions, the healthcare industry was caught off-guard even though its revenues surged highly. In the United States, healthcare is funded by the government to an extent; yet it accounts for 17.8% of the entire country’s revenue. In fact, the United States spends the most on health per person worldwide.
The healthcare business in the United States is growing significantly each year. Since 2017, it has expanded by 7.3% on average, a figure that would undoubtedly increase due to the emergence of the coronavirus. According to statistics by Policy Advice, the US healthcare industry is expected to increase to $808 billion by 2021, taking into account all the factors that impact it. Although the healthcare industry is a lucrative one, the barriers to entry are significant. To become a healthcare practitioner, an individual must complete a four-year undergraduate degree, a further four years of medical school, and from three to seven years in a residency program. In short, it takes between 10 to 14 years for an individual to become a licensed medical doctor in the United States. Moreover, the competition in the healthcare industry in the United States is intense, as 784,626 healthcare companies exist in the country.
2. Insurance Business
Due to accidents, natural disasters, financial loss, or events such as the COVID-19 pandemic, the insurance industry in the United States is booming in 2021. In 2019, the insurance industry’s net premiums were valued at an astounding total of $1.32 trillion. Insurance in the United States is sold in many forms for various purposes, such as life insurance, health insurance, property or casualty insurance, and fraternal insurance. Basically, insurance guarantees financial security for people in cases of any kind of loss, hence buying insurance is an integral component of financial planning. For the residents in the United States, insurance is important enough to be necessary in some cases, as 49 of the 50 states in the US require all vehicles that are being driven to have active insurance policies. Insurance policies hence remain in demand year-round in the USA.
The Allstate Corporation (NYSE: ALL), a well-known insurance company, reported profits of $5.58 billion, or $17.31 per share, in the fiscal year. The company’s revenue was reported as $43.44 billion. Another insurance company, The Travelers Companies, Inc. (NYSE:TRV) reported an increase of 53.4% of its stock price from $88 to $135 from 2019 to 2020. Similarly, its revenue witnessed a growth of 2.74% from $31,024 million to $31,874 million.
In the US, both the competition and the barriers to entry are high in the insurance industry. In 2019, 5,965 insurance companies were operative in the country. The insurance companies in the US generally offer policies to insure health, vehicles, homes, and travel. With health and wellness being at risk in 2021, the post-COVID world presents an even brighter future for the insurance business in the United States.
1. Software Business
As businesses begin offering their services online, they require online tools such as software to help them navigate, manage, develop, and deliver their products and services. Moreover, many large industries such as the financial industry, healthcare industry, and manufacturing industry need customized software due to the shift from analog systems of production to digital and mechanized systems. The software business deals with the development, publishing, and maintenance of either cloud-based software or licensed software. The growth trend of the software industry for the past 5 years since 2016 has increased significantly, from 5.32% growth between 2011 and 2015 to 7.8% growth between 2016 and 2021. This is because businesses and customers alike have invested in technology such as video games, computers, and software programs, which has had the effect of increasing the demand of software from businesses in recent years. Furthermore, we are seeing a rise of businesses that only operate internet-based solutions, which demand customized software to support their services.
VMware, Inc. (NYSE: VMW) is a software developing company in the US that boasts a revenue of $10.81 billion in fiscal year 2020, displaying an increase of 12% from the previous year. Moreover, its stock price soared 16.94% in the past year. Additionally, Oracle Corporation (NYSE: ORCL) is another profitable software company. The company’s revenue for the fiscal year 2020 was $39.1 billion, and its stock price rose 42.12% in the past 12 months.
The software industry boats high margins on its products, especially the software designed to suit a larger customer base. Inversely, custom-written software usually allows for narrower profit margins. Although the software industry is a fraction of the overall computer programming industry that takes place, the total market size of the software publishing industry in the United States in 2021 is forecasted to be $396.7 billion. The total profit generated from the software industry in 2021 is forecasted to be $115.8 billion. The software publishing industry is hence one of the most lucrative in the country.
You can also take a peek at George Soros’ Top 10 Stock Picks and 15 Most Valuable Cloud Computing Companies.
