Brief Thoughts on the World's 10 Biggest Companies

Includes: BRK.A, C, COP, CVX, GE, JPM, T, WFC, WMT, XOM
by: Efsinvestment

Forbes is one of the most respected and renowned business magazine of all. Recently, it published a list of The World's Biggest Public Companies, based on their profit, sales, market value and assets. Here is the list of top 10 U.S.-based companies of Forbes, with thoughts on their market-beating potential:

  1. JPMorgan Chase& Co. (JPM): The New-York based JPMorgan provides a number of financial services over the world. JPM largely avoided the mortgage-backed securities during the pre-crises period. Having a market capital of $178.2 billion, JPMorgan has a trailing P/E ratio of 9.93, while its forward P/E ratio is 7.9. JPM had an annual EPS growth of 7.19% in the last five years, and substantially increased its earnings last year. FBR Capital, Oppenheimer and RBC Capital Markets suggested an outperform rating for JPMorgan, while Deutsche Bank, Collins Stewart, Citigroup, Deutsche Securities and Ladenburg Thalmann recommend buying. Insiders have been buying large chunks of JPM stocks. If analyst estimates hold true, JPM has can beat the market with a large margin.
  2. General Electric (GE): GE operates as a financial services, media and technology conglomerate. General Electric has a market cap of $211.84 billion, and a P/E ratio of 17.3. Its forward P/E ratio is 12.3. Although the company had negative EPS growth in the last five years, analysts expect the company to have a 12.23% EPS growth in the next five. GE paid a dividend yield of 2.81%, and it had a 8.76% profit margin in 2010. Oppenheimer and Bernstein suggested outperform for GE, whereas Argus recommend buying. GE's recent earnings report exceeded the forecasts showing that GE is a safe and solid dividend company.
  3. Exxon Mobil Corp. (XOM): The Texas-based company explores, products, transports and sells crude oil and natural gas. Exxon keeps rising steadily since August and its shares double topped in the last two months. XOM has a gigantic market capital of $428.2 billion, and a trailing ratio of 13.88, while its forward P/E is 9.53. Exxon's earnings increased by 56.41% this year. Having a net profit margin of 8.19%, the company paid 2.04% dividend in 2010. Exxon is among the best energy companies for long-term investment.
  4. Berkshire Hathaway Inc. (BRK.A / BRK.B ): As a publicly investment manager, Berkshire primarily engages in the insurance and reinsurance of property and casualty risks business. The investment guru, Warren Buffet accumulated his $56 billion wealth through Berkshire's investments. Berkshire's quarterly EPS growth and three-month institutional transaction rates increased by 34.79% and 114.89%, respectively. Berkshire is a nifty company for investors who want to profit from Buffet's wisdom with minimal effort.
  5. Citigroup Inc. (C): Citigroup is a global financial services company offering a variety of financial products and services, founded in 1812 and based in New York. It operates in about 140 countries, providing service to nearly 200 million customers. Oppenheimer suggested an outperform rating for C, while Deutsche Securities and Ladenburg Thalmann recommend buying. What's admirable for Citigroup is that it has a real low P/E ratio of 12.6, and a forward P/E ratio 8.58. Citigroup has a market cap of $132.49 billion, and its profit margin is 12.6%. The recent beat-down is a good buying opportunity for those interested.
  6. Wells Fargo& Co. (WFC): The California-based WFC provides commercial, retail and corporate banking services especially in the U.S. The company operated nearly 9,000 banking stores in 39 states as of Dec 31,2010. The company has an astonishing quarterly earnings rate, up by 643.19%. Wells Fargo has a market capital of $150.68 billion, and its P/E ratio is 12.9. The forward P/E ratio is 7.9, and WFC had an EPS growth of 9.25% in the last five years. Oppenheimer and RBC Capital suggested outperform for WFC, while Collins Stewart and Ladenburg Thalmann recommend buying. Wells Fargo is a Warren Buffett (NYSE:BRK.A) favorite.
  7. AT T Inc. (T): AT&T offers telecommunication services to businesses, consumers and other service providers. AT&T's market capital is $181.3 billion, while its P/E and forward P/E ratios are 9.5 and 12, respectively. AT&T had an annual EPS growth of 17.77% over the last five years, while its earnings increased by 57.08% this year. It has a quite good dividend yield among the companies in the list (5.61%), while its profit margin is 15.61%. While analysts expect AT&T's profits to decline by 30% this year, AT&T is a safe dividend play.
  8. Chevron Corp. (CVX): As the second largest integrated energy company in the U.S., Chevron, formerly known as ChevronTexaco Corp., engages in petroleum, mining, chemicals, power generation, and energy operations over the world. The market capitalization of Chevron is $217.07 billion, while its P/E ratio is 11.4. It has a forward P/E ratio of 8.3, and it had an annualized EPS growth of 7.69%. What's admirable for this company is, while the company has a quite low P/E and forward P/E ratio, its earnings increased by 80.93% this year. Having a profit margin of 9.3%, Chevron paid a 2.7% dividend in 2010. Credit Suisse and Bernstein suggested an outperform rate for Chevron, while Benchmark and Citigroup recommends buying.
  9. Wal-Mart Stores, Inc. (WMT): Operating retail stores in various formats over the globe, Wal-Mart provides service in the U.S., Canada, Argentina, Brazil, Chile, Costa Rica, India, Japan, Mexico, PRC and the U.K. The market capital of WMT is $187.06 billion, and its trailing ratio is 12.76, while forward P/E ratio is 10.98. Wal-Mart had an average EPS growth of 8.96% over the last five years. With a dividend yield of 2.72%, Wal-Mart has a profit margin of 3.78%. While North American operations is saturated, the ex-SSSR states are desperately waiting for a low-cost retailer such as Wal-Mart.
  10. ConocoPhillips (COP): The Texas-based Conoco operates as an integrated energy company over the globe, providing service through six segments. Conoco has a market capital of $117.53 billion, and a P/E ratio of 10.6., while forward P/E ratio is 9.02. Although it had a negative EPS growth in the last five years, its earnings increased by 158.45% this year. ConocoPhillips offered a dividend yield of 3.27% in 2010. Along with other energy companies, ConocoPhillips is a solid dividend stock with large margin of safety.

Disclosure: I am long C.