By Darnell Brown
Today’s article will review six companies that are among the leaders in their particular industry. Each of these companies has a market capitalization that exceeds $8 billion. When we finish the review, we should have a good sense about which of these companies has the potential to earn big profits in 2012.
Cisco Systems (NASDAQ:CSCO)
Cisco Systems provides the computer router and switches that help to drive the internet.
Cisco Systems has a market cap of $88.06 billion. The company pays a $0.24 per share annual dividend that creates a 1.5% yield. The stock of Cisco Systems has performed poorly over the last 52 weeks. The company’s 52 week trading range is between $14.78 and $24.87. The stock is now trading at $16.01. The company’s third quarter earnings for the period ending April 30th were considered to be lackluster even though revenues and net income increased from the prior quarter. The 2011 third quarter revenue was $6.659 billion which was up from the prior quarter revenue of $6.621 billion. Third quarter net income was $1.807 billion which was up from $1.521 billion in the prior quarter.
Cisco Systems stock has been in a downward trend for more than 1 year. The company’s stock charts looks terrible. Cisco Systems switching business which drives about one third of sales has not done well in the face of competition from Hewlett Packard (NYSE:HPQ), Dell (NASDAQ:DELL) and Juniper (NYSE:JNPR). The good news is that Cisco Systems other businesses have been progressing and are projected to bring in $30 billion this year. Cisco System is still one of the world’s leading technology companies and it has almost $45 billion in cash and a strong balance sheet. I think that the stock is probably near its lows and I would rate Cisco Systems as a buy anywhere below $19.00 a share.
Sirius XM Radio Inc. (NASDAQ:SIRI)
Sirius XM Radio offers paid subscriptions for 180 plus channels of commercial free radio. Its venues includes music, sports, talk, news weather and more.
The company has a market cap of $8.21 billion and a P/E ratio of 209. Sirius Radio XM is a low priced stock that trades for $2.08. The stock's 52 week trading range is between $.095 and $2.44. The stock has done very well as of late. The stock price has increased by 68% year to date and 111% over the last 52 weeks. The company is enjoying rapid growth; its 2009 revenues were $2.472 billion while its 2010 revenues were $2.817 billion. Net 2009 income was $-538.226 million while 2010 net income was $43.055 million.
Sirius Radio XM has continued to grow and prosper in spite of competition from new internet radio providers like Pandora (NYSE:P). Sirius beats its competition because it has more stations and has popular radio personalities like Howard Stern, Eminem and Bill Walton. Sirius radio will benefit as the baseball season comes to an end and the new football season starts. Sirius also has the competitive advantage of having invested in bandwidth an infrastructure early in the company’s development. Sirius XM Radio should continue to add subscribers and grow profits. I rate this stock as a buy.
Apple Inc. (OTC:APPL)
Apple Inc. is an extremely large company with a market cap of $363.18 billion. Over the last 52 weeks, the stock has been in a range of between $235.56 and $404.50. The stock is now near the top of its range at $391.82. Apple Inc’s stock has been on roll and its price has increased by 21.7% year to date and 52.1% over the past year. In 2010, the company’s sales increased by 22.3 billion, which was a 52% increase from 2009.
For Apple Inc. the good news just keeps on coming. It has just become official that Apple’s iPhone has beaten out Nokia (NYSE:NOK) as the biggest seller of smartphones in the world. It has also been reported that Apple has doubled its overall share of the mobile handset market and become the fourth largest manufacturer of mobile phones in the world.
Apple Inc. has a smart innovative product line and should continue to enjoy rapid growth. The stock’s current P/E is 15.50 which I consider to be low for a high growth company. I rate Apple Inc. as a buy.
Ford Motor Company (NYSE:F)
Ford Motor Company manufactures and sells cars and trucks and operates a financial service business. Ford Motor Company has a market cap of $46.79 billion. The stocks 52 week performance has not been good. Ford stock has traded in a 52 week range of between $10.95 and $18.97. The stock is currently trading at $12.32. Ford Motor Company has been increasing revenues and reducing debt. Revenues increased from $116.28 billion in 2009 to $128.954 billion in 2010. Ford Motor Company’s debt is down from $192.04 in 2009 to $165.36 in 2010.
Ford Motor Company’s overall business has improved over the last 3 years and last quarter’s earnings showed particularly strong positive movement. The American automobile industry has shown across the board business improvement. I think that investors who are wary about investing in American automobile manufacturers like Ford, General Motors (NYSE:GM) and Daimler Chrysler (FIATY.PK) will eventual see that these companies have made a turnaround and are cheap.
On March 31, 2011 Ford Motor Company showed a profit of $2.551 billion. I believe that the company will continue to increase its profits. Coverage of Ford by banks like Citigroup (NYSE:C), Royal Bank of Canada Capital (NYSE:RY) and UBS AG (NYSE:UBS) generally show a positive trend and a valuation much higher than market price. With a P/E of 6.95 the stock is a huge value, and I rate Ford Motor Company as a buy.
Intel Corporation (NASDAQ:INTC)
Intel Corporation designs, manufactures and sells semiconductors and computer chips.
Intel Corporation has a market cap of 119.56 billion. Intel Corporation pays a $0.72 dividend that has a 3.20% yield. The stock has traded in a 52 week range of between $17.60 and $23.96 and is currently trading near the top of its range at $22.55. The company’s net income increased from $4.369 billion in 2009 to 11.464 billion in 2010.
Intel corporation’s’ first quarter earnings were 3.3 billion up 37 percent from the first quarter of 2010. The revenue and income results topped Wall Street predictions and the stock went up 7% on the day of the announcement. The company has a strong balance sheet which shows over 4.18 billion of cash and equivalents. Intel Corporation is a bellwether company that investors can feel comfortable about owning. The stock pays a dividend and increases profit from quarter to quarter. I think that with a P/E ratio of 10.35 the stock is cheap. Intel continues to pummel chief rival AMD (NYSE:AMD) and we wouldn't be surprised to see it pursue an acquisition of Linear Technology (NASDAQ:LLTC) or Maxim Semiconductor (NASDAQ:MXIM). I rate Intel Corporation as a buy.
Nucor Corp. (NYSE:NUE)
Nucor Corporation manufactures and sells steel and steel products throughout the world.
Nucor Corporation has a market cap of $12.30 billion. The stock pays a $1.45 dividend that yields 3.70%. The stock has a 52 week trading range of between $35.71 and $49.24. Nucor is currently trading at $38.92. Nucor’s 2010 income was $134.093 million up from $-293.613 in 2009.
Nucor Corp’s stock price has suffered over the last couple of year. Six years ago on July 29, 2005, Nucor’s stock was priced at $56.10. Nucor Corp is not suffering alone as the entire United States steel industry has been in a lukewarm state, taking U.S. steel (NYSE:X) and foreign maker Mittal (NYSE:MT) with it. The competition from Chinese steel makers has been devastating. With cheaper labor and less stifling regulations coupled to an absence of unionization, the Chinese can make steel for less than American companies.
Nucor Corporation still has a strong balance sheet but its days of strong earnings growth are probably over. With a 3.7% dividend some investors might consider Nucor to be an attractive stock. I, however, do not think that the steel industry will come into favor and with a P/E of 26.28; and thus the stock is probably overpriced. I rate Nucor Corporation as a hold.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.