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I thought the attached article interesting and a tad provocative. It was in today's UK Daily Telegraph newspaper. It is worth the five minute read.
While the word "global" is in the title, it is obviously a US-UK centric piece. Despite all the talk lately about global real estate and to a lesser extent banking/financials, I find it striking that not a single property company or bank/finance company is one of the seven blue chips singled out for a mention. The companies mentioned are in the technology (*3), food (*1), pharmaceutical (*1) and oil & gas sectors (*2).
I'm vested in Shell and Glaxo-Smith-Kline. I wish I had been vested a long time ago in the three technology companies mentioned!!
+++++++++++++++++++++++++++++++++++++++
Are these the seven best shares in the world?
Private investors have made their choices now we find out if the experts agree.
Apple (NasdaqGS: AAPL - news) is the world’s most desirable company, according to a poll of investors. When Barclays Stockbrokers asked its clients which stocks they would hold in their dream international portfolio, the technology giant behind the iPad and iPhone was the most popular choice, with 47pc of respondents choosing the company.
Next came BP, picked by 24pc, and GlaxoSmithKline on 10pc, followed by Google (7pc), Royal Dutch Shell (6pc), Microsoft (5pc) and McDonald’s (2pc). So if you are looking to build an international portfolio of stocks, are these seven a good place to start? In this Share Watch special, we find out what analysts in the City and on Wall Street think of them.
Apple =
You’ve probably never heard of Michael Anderegg, but he is certainly prepared to stand out from the crowd: the analyst, who works for Blue Water Capital Markets, is the only one on Wall Street to rate Apple a sell.
All 51 of the other brokers who write about Apple reckon the shares are at least a hold, with the vast majority 49 rating them a buy, according to FactSet Research Systems. It’s not hard to understand their enthusiasm. Apple has a track record of coming up with products that everyone wants and thanks to its reputation as the coolest technology brand, competitors tend to struggle even when they produce cheaper or better alternatives.
Analysts at Credit Suisse in New York are among the believers. In a note headed “Outsmarting, outgrowing, outperformingâ€, they judged Apple the best smartphone maker. “Even four years after the launch of the first iPhone, few vendors come close to comprehensively closing the gap,†they said.
Credit Suisse reckoned that the company’s profits could increase by almost 50pc annually between 2010 and 2012, concluding that Apple’s valuation relative to earnings was “attractiveâ€. They set a price target of $500. The average price target of the brokers monitored by FactSet is $448.90.
Several British stockbrokers trade in US shares; Barclays, for example, will charge you a minimum commission of £12.95, plus a foreign exchange conversion fee.
= BP =
Most analysts rate BP a buy but Stuart Joyner and Angus McPhail of Investec have particularly strong views on the underperformance of the share price and what the company should do about it.
BP relies on a “broken†business model and is worth almost 30pc more than its current market value, they said. They reckon the way to release that value is to break the company in three a US business, a British arm and an emerging markets focused “BRIC-ish Petroleumâ€. “We call for a radical, full demerger of BP to close the acute discount to our view of fair value,†Mr Joyner and Mr McPhail wrote. “We think investors should pressure BP to accelerate the non-core disposals and BRIC entry strategy.
Although they set a price target of 550p, the analysts said their “best case†valuation was 750p.
Their counterparts at Evolution described BP as “the big recovery story†among the integrated oil companies. Setting a price target of 510p, they said: “The valuation gap is compelling.â€
Twenty-one of the 35 analysts monitored by FactSet rate BP a buy, with 13 saying hold and just one seller. The average price target is 564p.
= GlaxoSmithKline =
Shares in the British drugs maker have gone nowhere in the past few years as investors wondered how the company would replace profits from former “blockbusters†hit by patent expiries and competition from cheaper “generic†medicines.
But there are signs that their pessimism may have been overdone. Analysts at Shore Capital said recently: “We are past the nadir for GSK at last.†They acknowledged problems such as falling US demand for Advair, the asthma treatment that accounts for 25pc of GSK’s sales, as well as European austerity measures and health-care reform in the US. But they said: “We suspect the Advair franchise is a much longer-duration asset than the market currently anticipates.†Shore said it expected GSK to retain its global leadership position in respiratory treatments.
It also praised GSK’s consumer-health division and the company’s progress in developing markets. “In totality, we believe that GSK possesses a much more defensive portfolio of businesses than the market currently perceives,†the broker said.
It forecast long-term sales growth of 4pc a year, producing annual earnings growth of 9pc (on a per-share basis). The shares yield about 5pc. “We believe that if our expectations for key franchises are realised, GSK should trade at a premium to its peers,†Shore’s analysts concluded, setting a price target of £15.35.
Their counterparts at Evolution said: “We note that GSK is in the guts of its transition to sustainable growth and still believe the stock will return to sustainable ‘mid-single-digit’ sales growth from 2012. We reiterate our buy rating and £15.50 price target.â€
The most common rating among analysts is hold 15 of the 36 tracked by FactSet opt to sit on the fence, with 14 buyers and seven sellers. Their average price target is £13.54.
= Google =
Most of us are familiar with Google as the first port of call for finding websites on our PC, but the company has diversified greatly from that original business and now has its fingers in many pies. More to the point for investors, it is busy making these new activities profitable. As UBS pointed out recently, Google’s display advertising business is producing revenues of more than $2.5bn and mobile advertising is making $1bn, while YouTube is making money from serving two billion videos a week to its users.
“We expect the focus to remain on building multi-billion dollar revenue streams out of the mobile, display, video, enterprise [corporate customers] and other businesses,†UBS said, adding that recent changes to Google’s management and structure were creating a “nimbler companyâ€.
UBS, which rates Google a “key callâ€, said Google offered the best long-term exposure to growth trends such as broadband penetration, mobile internet and software hosted in the “cloud†online, rather than on personal computers.
The Wall Street consensus on the company is strongly favourable: 33 of 38 brokers say buy, with the remainder at hold, according to FactSet. The average price target is $708.89.
= Shell =
Shell has kept a rather lower profile than BP of late but that didn’t stop analysts at Collins Stewart naming it as their top pick among the oil “supermajorsâ€. The broker said the market had not appreciated the impact of two major new projects in Qatar, which it estimated could produce the equivalent of 11pc of Shell’s 2010 production and 25pc of last year’s cash flow.
Meanwhile, analysts at Bernstein said Shell’s technical leadership in areas such as ultra-deepwater and Arctic exploration should help the company grow production and deserved a premium.
Of the 37 analysts tracked by FactSet, 25 rate the shares a buy; 10 are holders and two would sell. The average price target is £25.45.
= Microsoft =
For many years, Microsoft seemed to have a licence to print money thanks to the almost universal adoption of its Windows software for PCs. Times are tougher now, with many abandoning traditional computers for smartphones and tablets such as Apple’s iPad. Here, Microsoft is playing catch-up; it recently signed a deal with Nokia that will see the handset maker use Windows software on its smartphones.
Deutsche Bank said: “Its Nokia deal is a step in the right direction and will help expand Windows Phone 7’s footprint, attracting more developers to the platform.†On the basis of Microsoft’s expected cash flows over the next 10 years, it put a value of $35 on the shares.
Meanwhile, analysts at Credit Suisse expect the forthcoming Windows 8 software to have a greater impact in the tablet market than investors expect. Their price target is $36. Of the 35 analysts tracked by FactSet, 25 are buyers and nine say hold, with just one seller. The average price target is $32.93.
= McDonald’s =
McDonald’s is a favourite on the Wall Street menu no broker rates the shares a sell, while 17 of the 25 monitored by FactSet are buyers. The fast-food chain is one of UBS’s 13 “key calls†among US shares. The bank rejected the idea it’s just a recession stock where cash-strapped families can buy a meal for a few dollars. UBS set a price target of $87 on the shares, but with the potential for the upper $90s in the best case.
The chain is also getting a makeover. When Deutsche Bank analysts visited some of the revamped outlets in Florida recently, they were impressed by the “very contemporary†exteriors and interiors, as well as extra capacity. “We believe this program will help McDonald’s ... to widen the gap with competitors, which generally do not have the capability to execute similar reinvestments,†the analysts wrote.
Deutsche Bank’s price target is $89, compared with the FactSet average of $87.52.
While the word "global" is in the title, it is obviously a US-UK centric piece. Despite all the talk lately about global real estate and to a lesser extent banking/financials, I find it striking that not a single property company or bank/finance company is one of the seven blue chips singled out for a mention. The companies mentioned are in the technology (*3), food (*1), pharmaceutical (*1) and oil & gas sectors (*2).
I'm vested in Shell and Glaxo-Smith-Kline. I wish I had been vested a long time ago in the three technology companies mentioned!!
+++++++++++++++++++++++++++++++++++++++
Are these the seven best shares in the world?
Private investors have made their choices now we find out if the experts agree.
Apple (NasdaqGS: AAPL - news) is the world’s most desirable company, according to a poll of investors. When Barclays Stockbrokers asked its clients which stocks they would hold in their dream international portfolio, the technology giant behind the iPad and iPhone was the most popular choice, with 47pc of respondents choosing the company.
Next came BP, picked by 24pc, and GlaxoSmithKline on 10pc, followed by Google (7pc), Royal Dutch Shell (6pc), Microsoft (5pc) and McDonald’s (2pc). So if you are looking to build an international portfolio of stocks, are these seven a good place to start? In this Share Watch special, we find out what analysts in the City and on Wall Street think of them.
Apple =
You’ve probably never heard of Michael Anderegg, but he is certainly prepared to stand out from the crowd: the analyst, who works for Blue Water Capital Markets, is the only one on Wall Street to rate Apple a sell.
All 51 of the other brokers who write about Apple reckon the shares are at least a hold, with the vast majority 49 rating them a buy, according to FactSet Research Systems. It’s not hard to understand their enthusiasm. Apple has a track record of coming up with products that everyone wants and thanks to its reputation as the coolest technology brand, competitors tend to struggle even when they produce cheaper or better alternatives.
Analysts at Credit Suisse in New York are among the believers. In a note headed “Outsmarting, outgrowing, outperformingâ€, they judged Apple the best smartphone maker. “Even four years after the launch of the first iPhone, few vendors come close to comprehensively closing the gap,†they said.
Credit Suisse reckoned that the company’s profits could increase by almost 50pc annually between 2010 and 2012, concluding that Apple’s valuation relative to earnings was “attractiveâ€. They set a price target of $500. The average price target of the brokers monitored by FactSet is $448.90.
Several British stockbrokers trade in US shares; Barclays, for example, will charge you a minimum commission of £12.95, plus a foreign exchange conversion fee.
= BP =
Most analysts rate BP a buy but Stuart Joyner and Angus McPhail of Investec have particularly strong views on the underperformance of the share price and what the company should do about it.
BP relies on a “broken†business model and is worth almost 30pc more than its current market value, they said. They reckon the way to release that value is to break the company in three a US business, a British arm and an emerging markets focused “BRIC-ish Petroleumâ€. “We call for a radical, full demerger of BP to close the acute discount to our view of fair value,†Mr Joyner and Mr McPhail wrote. “We think investors should pressure BP to accelerate the non-core disposals and BRIC entry strategy.
Although they set a price target of 550p, the analysts said their “best case†valuation was 750p.
Their counterparts at Evolution described BP as “the big recovery story†among the integrated oil companies. Setting a price target of 510p, they said: “The valuation gap is compelling.â€
Twenty-one of the 35 analysts monitored by FactSet rate BP a buy, with 13 saying hold and just one seller. The average price target is 564p.
= GlaxoSmithKline =
Shares in the British drugs maker have gone nowhere in the past few years as investors wondered how the company would replace profits from former “blockbusters†hit by patent expiries and competition from cheaper “generic†medicines.
But there are signs that their pessimism may have been overdone. Analysts at Shore Capital said recently: “We are past the nadir for GSK at last.†They acknowledged problems such as falling US demand for Advair, the asthma treatment that accounts for 25pc of GSK’s sales, as well as European austerity measures and health-care reform in the US. But they said: “We suspect the Advair franchise is a much longer-duration asset than the market currently anticipates.†Shore said it expected GSK to retain its global leadership position in respiratory treatments.
It also praised GSK’s consumer-health division and the company’s progress in developing markets. “In totality, we believe that GSK possesses a much more defensive portfolio of businesses than the market currently perceives,†the broker said.
It forecast long-term sales growth of 4pc a year, producing annual earnings growth of 9pc (on a per-share basis). The shares yield about 5pc. “We believe that if our expectations for key franchises are realised, GSK should trade at a premium to its peers,†Shore’s analysts concluded, setting a price target of £15.35.
Their counterparts at Evolution said: “We note that GSK is in the guts of its transition to sustainable growth and still believe the stock will return to sustainable ‘mid-single-digit’ sales growth from 2012. We reiterate our buy rating and £15.50 price target.â€
The most common rating among analysts is hold 15 of the 36 tracked by FactSet opt to sit on the fence, with 14 buyers and seven sellers. Their average price target is £13.54.
= Google =
Most of us are familiar with Google as the first port of call for finding websites on our PC, but the company has diversified greatly from that original business and now has its fingers in many pies. More to the point for investors, it is busy making these new activities profitable. As UBS pointed out recently, Google’s display advertising business is producing revenues of more than $2.5bn and mobile advertising is making $1bn, while YouTube is making money from serving two billion videos a week to its users.
“We expect the focus to remain on building multi-billion dollar revenue streams out of the mobile, display, video, enterprise [corporate customers] and other businesses,†UBS said, adding that recent changes to Google’s management and structure were creating a “nimbler companyâ€.
UBS, which rates Google a “key callâ€, said Google offered the best long-term exposure to growth trends such as broadband penetration, mobile internet and software hosted in the “cloud†online, rather than on personal computers.
The Wall Street consensus on the company is strongly favourable: 33 of 38 brokers say buy, with the remainder at hold, according to FactSet. The average price target is $708.89.
= Shell =
Shell has kept a rather lower profile than BP of late but that didn’t stop analysts at Collins Stewart naming it as their top pick among the oil “supermajorsâ€. The broker said the market had not appreciated the impact of two major new projects in Qatar, which it estimated could produce the equivalent of 11pc of Shell’s 2010 production and 25pc of last year’s cash flow.
Meanwhile, analysts at Bernstein said Shell’s technical leadership in areas such as ultra-deepwater and Arctic exploration should help the company grow production and deserved a premium.
Of the 37 analysts tracked by FactSet, 25 rate the shares a buy; 10 are holders and two would sell. The average price target is £25.45.
= Microsoft =
For many years, Microsoft seemed to have a licence to print money thanks to the almost universal adoption of its Windows software for PCs. Times are tougher now, with many abandoning traditional computers for smartphones and tablets such as Apple’s iPad. Here, Microsoft is playing catch-up; it recently signed a deal with Nokia that will see the handset maker use Windows software on its smartphones.
Deutsche Bank said: “Its Nokia deal is a step in the right direction and will help expand Windows Phone 7’s footprint, attracting more developers to the platform.†On the basis of Microsoft’s expected cash flows over the next 10 years, it put a value of $35 on the shares.
Meanwhile, analysts at Credit Suisse expect the forthcoming Windows 8 software to have a greater impact in the tablet market than investors expect. Their price target is $36. Of the 35 analysts tracked by FactSet, 25 are buyers and nine say hold, with just one seller. The average price target is $32.93.
= McDonald’s =
McDonald’s is a favourite on the Wall Street menu no broker rates the shares a sell, while 17 of the 25 monitored by FactSet are buyers. The fast-food chain is one of UBS’s 13 “key calls†among US shares. The bank rejected the idea it’s just a recession stock where cash-strapped families can buy a meal for a few dollars. UBS set a price target of $87 on the shares, but with the potential for the upper $90s in the best case.
The chain is also getting a makeover. When Deutsche Bank analysts visited some of the revamped outlets in Florida recently, they were impressed by the “very contemporary†exteriors and interiors, as well as extra capacity. “We believe this program will help McDonald’s ... to widen the gap with competitors, which generally do not have the capability to execute similar reinvestments,†the analysts wrote.
Deutsche Bank’s price target is $89, compared with the FactSet average of $87.52.
RBM, Retired Botanic MatSalleh