This year’s top three companies are Berkshire Hathaway Inc. (NYSE:BRK.A), The Walt Disney Company (NYSE:DIS) and Apple Inc. (NASDAQ:AAPL).
Berkshire Hathaway – Invest along with the greatest investor
Berkshire Hathaway Inc. (NYSE:BRK.A), under the leadership of the most respected investor, Warren Buffett, jumped to the top of the list from the 15th position last year with the highest mean score of 3.9. For the past 12 months, Berkshire Hathaway Inc. (NYSE:BRK.A) has delivered to its shareholders a nice gain on the market, advancing nearly 35% and outperforming the S&P 500’s return of only 17.9%. Berkshire Hathaway is considered to be a home of many respected operating businesses in various industries including manufacturing, railroad, insurance and even candy/chocolate making.
In the first quarter of 2013, the company’s profit jumped 51% from $3.2 billion, or $1,966 per share, to $4.9 billion, or $2,977 per class A share. The significant year-over-year growth in its profit was due to the improved operating results in the insurance business as well as investment and derivative contract gains.
Its book value has experienced growth of 5.5% since the end of 2012 to $120,525 per class A share. The company estimates its insurance float, which could be considered the net liabilities assumed under insurance contracts, reached $73 billion. Berkshire Hathaway Inc. (NYSE:BRK.A) is trading at $168,600 per Class A share, with the total market value of $277.7 billion. The market values Berkshire Hathaway at around 1.4 times its book value.
Buffett has managed to grow Berkshire Hathaway Inc. (NYSE:BRK.A) at very high rates for the past several decades. In the period of 1965 through 2012, the company’s book value annualized growth rate was as high as 19.7%, translating to the overall whopping gain of 587,000%. Looking forward, with its 70 diversified operating businesses, talented and long-term management at each subsidiary, combined with the great capital allocation skills of Buffett and his associates, Berkshire Hathaway Inc. (NYSE:BRK.A) is still truly a great business to own in the long run.
Disney – a consistent increasing dividend payer
The Walt Disney Company (NYSE:DIS) ranked second the in the list with the mean score of 3.8. In the past 12 months, shares of The Walt Disney Company (NYSE:DIS) also enjoyed quite a sweet gain of more than 30.2%. The company operates in five main business segments: Media networks, parks and resorts, studio entertainment, consumer products and interactive.
In the second quarter 2013, the media-networks segment generated $1.9 billion in operating income while the parks and resorts segment ranked second with $383 million in operating profit. The media-networks segment seems to be the most profitable division with the highest operating margin of 37.5%. The consumer-products segment ranked second with more than 26% operating margin.
What attracts income investors to The Walt Disney Company (NYSE:DIS) is its consistently increasing dividend payments. In the past 10 years, its dividends increased from $0.21 per share in 2003 to $0.60 per share in 2012. At $63.10 per share, Walt Disney is worth $113.7 billion in market capitalization. The market values The Walt Disney Company (NYSE:DIS) at around 11.1 times its trailing earnings before interest, taxes, depreciation and amortization (EBITDA). At the current price, the dividend yield stays at 1.2%.
What I like about The Walt Disney Company (NYSE:DIS) is its consistent share buybacks. Since the beginning of its fiscal year, the company has repurchased around 38 million shares for $2 billion. With the decent second quarter operating performance, I expected that Disney would kept repurchasing its shares for the next two fiscal quarters to return more cash to its shareholders.
Apple – a growth stock turned value
Apple Inc. (NASDAQ:AAPL), which topped of the world’s respected companies list last year, has dropped to the third position with the mean score of approximately 3.8. Apple has moved from the growth category to value category. It holds the second position, with a 17.3% market share in the world’s smartphone industry.
Even with slower growth than it used to experience, Apple Inc. (NASDAQ:AAPL) looks quite attractive from the quantitative perspective. Apple has been pressured by hedge fund manager David Einhorn to return its huge cash pile to investors to unlock shareholder value. Interestingly, Apple Inc. (NASDAQ:AAPL) has issued around $17 billion in bonds, making use of low-debt financing to return more cash to its shareholders. Even with the lower credit rating, Apple managed to issue bonds with a triple-A-rating equivalent interest rate in the range of 0.5% to 3.9%.
In the next two years, the company intends to return as much as $100 billion in cash to shareholders in both forms of dividend payment and share purchases.
What I like about Apple Inc. (NASDAQ:AAPL) is its low goodwill and intangible assets compared to other tech giants, accounting for only nearly 3% of the total assets. Indeed, with $145.5 billion in cash and total investments as of March, it could acquire Facebook Inc (NASDAQ:FB), Hewlett-Packard Company (NYSE:HPQ) and Yahoo! Inc. (NASDAQ:YHOO) combined. Apple is trading at $396.50 per share, with the total market cap of $372.2 billion. The market values Apple at only 6.1 times its trailing EBITDA.
My Foolish take
All of those three above-mentioned businesses could fit in investors’ long-term portfolios. Berkshire Hathaway Inc. (NYSE:BRK.A), under Buffett’s superior leadership and the growing performance of its operating businesses, could deliver much more business value in the long run. The Walt Disney Company (NYSE:DIS), with the superior brand in many operating fields, might also experience decent growth in the future. Investors might also consider Apple with a juicy dividend yield at 3%. Moreover, a potential $100 billion cash return represents a whopping 27% or so total yield to Apple Inc. (NASDAQ:AAPL)’s shareholders in the next two years.
The article The World’s 3 Most Respected Companies originally appeared on Fool.com and is written by Anh Hoang.
Anh HOANG owns shares of Apple. The Motley Fool recommends Apple and Walt Disney. The Motley Fool owns shares of Apple and Walt Disney. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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