Google Inc (GOOG), Analog Devices, Inc. (ADI): Cantillon Capital Management’s Top Picks for Q3

The Coca-Cola Company (NYSE:KO) remained one of Cantillon’s top picks between April and June at 7.2 million shares. Investors hungry for defensive stocks- Coca-Cola’s beta is 0.3, and while the 2.7% dividend yield is not particularly high it’s at least somewhat interesting- like the soda company, and as a result it trades at 21 times its trailing earnings. However, net income has been down and so we don’t think that The Coca-Cola Company (NYSE:KO) is a good value at this time; in addition, we’d imagine that investors looking for a low-beta stock could find one with a higher yield.

The fund reduced its holdings of Priceline.com Inc (NASDAQ:PCLN) but the online travel company remained one of its largest positions by market value. Priceline.com Inc (NASDAQ:PCLN) continues to grow strongly. with revenue up 26% in the first quarter of 2013 versus a year earlier and net margins actually improving to the point where earnings were up 34%. The market price has already incorporated a good deal of future earnings growth into the valuation, with a trailing P/E of 32, and surely growth has to slow sometime, but we’d still want to take a closer look at the company.

According to the 13F, von Mueffling increased his stake in Baidu.com, Inc. (ADR) (NASDAQ:BIDU) to a total of about 2.4 million shares. Revenue growth has been quite high at Baidu.com, Inc. (ADR) (NASDAQ:BIDU), and while margins have been shrinking the company still experienced 9% profits growth in its most recent quarterly report compared to the same period in the previous year. With the stock falling 12% in the last year, the trailing P/E is now 20. We’d have to check on the reasons for the weaker margins but at that valuation Baidu could also be a potential growth play.

Final thoughts

Clearly, William Von Mueffling has a bit of a favored interest in tech-focused companies. Google Inc (NASDAQ:GOOG), his largest equity holding, is on a roll in 2013 and is making its way ever-closer to that vaunted $1,000 mark, while Chinese search giant Baidu offers solid growth at a reasonable price. Priceline is the most exciting play in the online travel space, and Analog Devices, Inc. (NASDAQ:ADI) has been a respectable semiconductor stock year-to-date. Coca-Cola is the only exception, but if you’re going to go non-tech, why not go with the world’s biggest soft drink company?

Disclosure: none