These 2 companies could make your rich

What to look for to get rich slowly with the compounding power of companies like CSL Limited (ASX:CSL).

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There are things in life which just can't be rushed. Growing your wealth is one of them.

Scrolling through forums and Facebook pages dedicated to 'investing', it still surprises me how many people feel convinced they've found the next star lithium company or 'breakout' tech stock.

Maybe they have, but you should still avoid them. There are no free lunches in investing and as financial theory states it is almost impossible to achieve higher returns without taking on additional risk.

Instead, let's focus on companies with quality products, high returns and a history of growth. This will weed out the speculative and sow the seeds for the compounding returns which will help to grow our wealth over time.

Two of the companies I think are standouts in these areas are CSL Limited (ASX: CSL) and Blackmores Limited (ASX: BKL).

1. CSL Limited (ASX: CSL)

CSL develops and sells a wide range of blood products which help save lives. The products do amazing things like help blood clotting for haemophilia and vaccinate against influenza. It's complicated stuff and, supported by a bundle of patents, hard to replicate.

The company's revenue growth has been strong over the last five years; 2015 revenue was 70% higher than in 2010, and when it comes to returns on shareholder equity (ROE), CSL is at the top of the class.

In fact, with a ROE of 50% and conservative amounts of debt, CSL is one of my favourite compounding companies to own today. The high return is a product of both CSL's strong profit margins and a massive $950 million on-market share buy-back in 2014 which reduced the equity in the business.

2. Blackmores Limited (ASX: BKL)

Health supplement company Blackmores has also done a great job of growing sales. In the last five years revenues have more than doubled which is especially significant given the number of competing brands on pharmacy and supermarket shelves.

The perception of quality tied to the Blackmores brand helps it stand out for consumers and is an advantage the company expects to leverage for growth in the Asia region. Sales in the Asia region grew 26% in 2015 and now account for almost 18% of total sales. Since the brand relies so strongly on its product quality, failure in this area would be a potential risk factor.

As well as its history of growth the company reported its own impressive ROE for the full year 2015 of 35% which can be reinvested back into the company towards future growth.

Motley Fool contributor Regan Pearson has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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