More Proof Politics and Business Don’t Mix: Whole Foods Market, Inc. (WFM) and More

Amazon.com, Inc. (NASDAQ:AMZN) shares carry an enormous price tag, thanks in part to spectacular growth that has caused sales to go from about $34 billion in 2010 to about $60 billion in 2012. That’s a gain of $24 billion on the top line, over two years.

You know how much Wal-Mart’s sales have grown in that time? They’ve grown by $40 billion. True, it’s from a bigger base, but the bottom line is investors will pay $2.50 for each dollar of Amazon sales, and only 50 cents for $1 of WMT sales.

If any company is likely to become the Pullman of our time, a flashpoint of employer arrogance leading to strikes, violence and reform from government, it’s clearly Wal-Mart.

It doesn’t have to be that way. Costco Wholesale Corporation (NASDAQ:COST) has been growing considerably faster than Wal-Mart the last several years – shareholders pay 60 cents for each dollar of the company’s sales, yet Costco manages to pay employees well.

Costco sells more merchandise in each square foot of space than Wal-Mart’s Sam Club warehouses. Wal-Mart employees take $4.6 billion in federal aid each year due to their low wages, while Costco employees make about $17 per hour. Costco doesn’t have to advertise as much for its sales — it doesn’t advertise at all — and it has less theft by employees. Customers will drive many miles to reach a Costco, often passing several Wal-Mart stores along the way.

You get Wal-Mart shares at a discount to Costco shares, paying less for Wal-Mart earnings than for Costco earnings, as a result of Wal-Mart’s politics, not its operations, which are great. Costco shareholders have also seen their shares gain 60% in value over the last five years, against 40% for Wal-Mart.

The Foolish Take

Keep your politics to yourself. Don’t let them get in the way of making money, or they will cost investors, who will withhold from you the capital you need to grow just when you most need it.

Do your research. If you can find nothing about the politics of a company and its management, that doesn’t mean they don’t have political views. It may be they’re just more businesslike in the defense of them.

Just as entertainers like the Dixie Chicks can be hurt by wearing their politics on their sleeves, so can corporations. In these cases, it’s investors who get hurt.

The article More Proof Politics and Business Don’t Mix originally appeared on Fool.com and is written by Dana Blankenhorn.

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