BusinessWeek keeps a list of "the best companies in the world." As it turns out, it's actually a list of the best investments anywhere, and you can find some great investment ideas there.
This year's list looks at companies with above-average sales growth over the last five years, at least $10 billion of annual revenue, serious international sales, and five-year stock returns above zero. I like BusinessWeek's methods here, because the magazine has essentially designed a screen that finds excellent businesses for you with a record of sustained growth.
And by these criteria, the best company in the world today is Nintendo (OTC: NTDOY).
Don't let the Pink Sheets designation deceive you: Nintendo is a serious investment and an official Motley Fool Stock Advisor recommendation. In the five years it's had that designation, Nintendo has crushed the market with 38% annual returns for a near five-bagger return on investment. Riding high on the Wii and DS gaming systems, Nintendo's sales have expanded by 36% a year over the same time frame.
But the ship may have sailed on that opportunity. After all, investors have already been richly rewarded for Nintendo's sales growth. Further down the list, you'll find a few exceptional growth businesses whose stocks have been left behind. Here's a sample of findings from BusinessWeek's 20 best companies in the world:
| Company |
5-Year Value CAGR
|
5-Year Sales CAGR
|
|
Google (Nasdaq: GOOG )
|
9%
|
62%
|
|
Apple (Nasdaq: AAPL )
|
24%
|
41%
|
|
Nintendo
|
38%
|
36%
|
|
BHP Billiton (NYSE: BHP )
|
14%
|
29%
|
|
Amazon.com (Nasdaq: AMZN )
|
1%
|
29%
|
|
America Movil (NYSE: AMX )
|
10%
|
20%
|
|
Teva Pharmaceutical Industries (Nasdaq: TEVA )
|
9%
|
20%
|
Data from Reuters via BusinessWeek.
Unlike Nintendo, some of these stocks have failed to keep pace with torrid growth in their underlying businesses. As you can see in the table above, sales growth has been running circles around share-price gains here. The two examples that jump out at me are Google and Amazon -- not only because I happen to follow both companies on a regular basis, but also because the data above shines a stark light on possible injustices in their share prices.
You could argue that some of the Lagging Stock Syndrome is caused by unreasonably expensive starting points five years ago. In Amazon's case, I might even agree if you twist my arm hard enough -- we’re looking at a sky-high P/E ratio of 61. But Google is still growing at an above-average pace, and I think today's $500 share price is a travesty that will be corrected in due time. Like fellow Fool Rick Munarriz, I think Google stock is worth more than gold. Google’s PEG ratio is fairly reasonable -- and I’m not convinced that analysts who set the growth estimates are giving Google its due. So Nintendo might be the best investment of the last five years, but Google might turn out to rule the next five.
What's the best company and stock in your world? Tell us in the comments below.
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