For Immediate Release
Chicago, IL – January 19, 2012 – Today, Zacks Investment Ideas
feature highlights Features: Apple ( AAPL),
Berkshire Hathaway ( BRK.B),
Google ( GOOG), Procter &
Gamble ( PG) and Southwest Airlines (
LUV).
America’s Most Admired Companies…On
Sale!
"It takes 20 years to build a reputation and five minutes to
ruin it." - Warren Buffett
In business, reputation is everything. And each year, Fortune
magazine attempts to quantify this by asking businesspeople and
securities analysts which companies they admire the most.
It's interesting to see the shift in the list from pre-Great
Recession to post-Great Recession.
In 2007, for instance, the top 3 most admired companies were
General Electric, Starbucks and Toyota Motor. This year, they're
13th, 16th and 33rd, respectively. And a number of former
sacrosanct financial institutions have fallen way down on the
list.
Meanwhile, tech companies have climbed in the rankings. Now the
top 2 most admired companies (and 5 of the top 12) are tech
companies, including #7 Amazon.com, which wasn't even in the top 50
just 5 years ago.
Wonderful Businesses at a Reasonable Price
Some companies have managed to stay in the top 20 before, during
and after the financial crisis. And even better, because of
concerns over global economic growth in 2012 and risks stemming
from the Eurozone debt crisis, some of these wonderful businesses
are currently trading at very reasonable prices.
For the long-term investor, this could be a great opportunity to
generate strong returns by buying some of the most revered
businesses in the world.
5 Great Companies on Sale
Apple ( AAPL)
Average 'Most Admired' Ranking Since 2007: 2.2
2012 Ranking: 1
Current Forward P/E: 11.5x
10-year Median P/E: 28.7x
On the verge of bankruptcy 15 years ago, Apple has now topped
the list of most admired companies for 4 years in a row. And its
reputation as a premium brand is spreading like wildfire in a
market more than 4x the size of the U.S. - China.
The company is about as far from bankruptcy as possible now,
with no debt and over $81 billion ($87/share) in cash and
securities.
Berkshire Hathaway (
BRK.B)
Average 'Most Admired' Ranking Since 2007: 2.8
2012 Ranking: 3
Current Forward P/E: 14.9x
10-year Median P/E: 18.9x
No doubt Berkshire's sterling reputation is an extension of its
popular chairman and CEO, Warren Buffett. He almost ate his own
words on reputation during the David Sokol/Lubrizol fiasco, but
that seemed to blow over rather quickly.
The down-to-earth Oracle of Omaha is admired for living like a
normal American. He lives in the Midwest in a nice (but not lavish)
home, drives himself to work every day, and eats fast food. And
he's giving away the bulk of his fortune to charity when he
dies.
Berkshire has managed to grow its book value by more than 20%
per year for almost half a century. Although Mr. Buffett has warned
shareholders not to expect these kinds of returns in the future,
the wide-moat company should still perform very well.
Google ( GOOG)
Average 'Most Admired' Ranking Since 2007: 4.0
2012 Ranking: 2
Current Forward P/E: 16.2x
Historical Median P/E: 27.3x
One of Google's philosophies is that "You can make money
without doing evil." A lot of companies might have similar
mission statements. And why not? It makes for good PR.
But for some reason, it seems like Google actually
means it.
Shares are trading around the same price as they were back in
late 2007, when it earned $13.29 per share. But in 2012, it's
expected to earn $38.22 per share.
Procter & Gamble ( PG)
Average 'Most Admired' Ranking Since 2007: 6.8
2012 Ranking: 5
Current Forward P/E: 14.9x
10-year Median P/E: 19.0x
Procter & Gamble has been around since 1837. It scores high
for its innovation, people management, social responsibility and
financial soundness.
The company also owns some of the best-known household brands
like Braun, Crest, Pampers, Tide, Dawn, Charmin, Gillette, and
Pepto-Bismol, just to name a few. And the company is expanding
rapidly in the emerging markets.
P&G generates steady and consistent free cash flow, which it
has been using to reward shareholders through higher dividends. It
currently yields a solid 3.2%.
Southwest Airlines ( LUV)
Average 'Most Admired' Ranking Since 2007: 8.0
2012 Ranking: 4
Current Forward P/E: 10.9x
10-year Median P/E: 23.5x
Flying is neither fun for the traveler nor consistently
profitable for the airline. So to see an airline anywhere on this
list is saying something. Southwest is revered for its low cost,
exceptional service and the fact that it doesn't nickel and dime
its customers with fees ("Bags fly free").
They say the fastest way to become a millionaire is to start as
a billionaire and buy an airline. But Southwest has been a much
more consistent performer than most of its competitors.
The stock has gotten beaten up lately over concerns about oil
prices and slower economic growth. But these fears may be
overblown. The company is expected to see strong EPS growth in
2012, and the acquisition of AirTran should provide Southwest with
strong growth opportunities in the future. Despite this, shares
trade at just 11x forward earnings and 1.1x book value - near its
Great Recession lows.
The Bottom Line
These 5 companies are consistently some of the most admired in
the world. They also happen to be trading at very reasonable
prices. For the long-term investor, this could be a great
opportunity to generate strong returns owning some of America's
most reputable businesses.
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APPLE INC (AAPL): Free Stock Analysis Report
BERKSHIRE HTH-B (BRK.B): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis Report
SOUTHWEST AIR (LUV): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis Report
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