Oil, technology, minerals and banking. Those are the industries
that are host to the world's most richly-valued companies. In fact,
with a market cap of more than $250 billion, these companies are
larger than thegross domestic product (
) of countries such Portugal, Egypt or Chile.
I'll tell you how you canprofit from these titans of industry in a
minute, but first, take a look at the five most valuable stocks on
Market cap. ($M)
|Exxon Mobil Corp. (
||World's largest non state-owned oil and gas
|Apple Inc. (
||Nine straight years of at least 28% sales
growth for this tech giant.
|Ind. and Comm'l Bank of China (
||Largest of China's four quasi state-owned
|PetroChina Co. Ltd. (
||Aggressive acquirer of foreign oil
|BHP Billiton Ltd. (BHP)
||Aluminum, copper, gold, silver, nickel --
they mine it all.
Joining this exclusive club is quite an honor, but you can be
kicked out at any time.
was worth roughly $600 billion a decade ago, the biggest company in
the world at the time, and now it doesn't even rank in the top 10.
eventually overtook GE, but has since fallen to No. 6 in the world.
Just below Microsoft resides Brazil's energy titan
China Construction Bank (OTC BB: CICHF)
isn't far behind. [My colleague Ryan Fuhrman thinks Petrobras could
the first $1 trillion stock
The fact that four of the nine largest companies in the world
reside in China or Brazil should tell you we live in a changed
A Crystal ball into the future
How will this list look five years from now? Well, a look at each
of the top companies' prospects gives us a pretty idea about
tomorrow's titans -- and how you canprofit .
1. Exxon Mobil (NYSE:
The odds are against this energy company retaining its topspot ,
for one simple reason: buybacks.Shares outstanding peaked at 6.9
billion and have been falling ever since, to less than five billion
currently. Management intends to stick with that plan, and the
share count could fall below four billion in the next five
years.Shares would need to rise about 25% simply to offset that
trend, and that's not assured because this is now a slow-growth
company. (2010 sales are likely to be onpar with sales levels back
in 2006). Then again, a fresh "Super-spike" in oil prices would
give a solid boost toshares . But surging oil prices have a way of
creating conditions for a pullback as demand gets choked off.
ExxonMobil'smarket value will be less than $400 billion five years
2. Apple (Nasdaq:
I'm in the minority on the prospects for this hot tech stock. The
fickle world of consumer electronics means that it's hard to stay
on top of the mountain for an extended period. (Just ask
or Microsoft). It's impossible to deny Apple's near-term momentum,
stellar brand and stokedbalance sheet (The cash pile has just grown
to $60 billion). In all likelihood Apple will power even higher in
coming weeks and months, as most analysts have very lofty price
targets. But as the year plays out,
are at risk. Investors are expecting a tremendous surge in iPad
sales in 2011, after an already-stellar 2010, and any shortfall to
current forecasts combined with the uncertainty surrounding
Co-founder and CEO Steve Jobs' health would punish the stock.
Apple'smarket value works its way toward the $400 billion mark
before starting a long and steady decline that puts it back in
and Microsoft territory (i.e. below $250 billion).
3. Industrial and Commercial Bank of China
Even if the world's largest bank failed to grow in coming years, it
still looks poised to rise in value. That's because it increasingly
looks as if China's yuan will appreciate 15%, 20% or even 25% at
some point down the road. [Read
why investors should be worried...
A 20% move in thecurrency would push ICBC'smarket value above $300
trillion. Of course the fate of the Chineseeconomy will also play a
role. The country's breakneck economic growth has not come without
cost. Media reports note that China is sitting on a vast oversupply
of newly-built apartment complexes, a number of which stand empty.
And who would be left holding the bag if realestate developers
default on loans? ICBC and its banking peers. That could push the
down in coming quarters. But over the long-term, further growth in
the Chineseeconomy looks inevitable, simply based on projections of
rising per capita income.
ICBC's market value swells to more than $400 billion at some point
in the next five years, thanks to economic growth andcurrency
4. PetroChina (NYSE:
To meet China's insatiable energy needs, PetroChina has been on a
spending spree, snapping up energy fields on virtually every
continent. Were it not for domestic concerns about energy security
in the United States, PetroChina would likely have already been a
very active buyer of U.S. energy plays. As is the case with
ExxonMobil, rising energy prices would help to boost this company's
value. Shares, which trade for $140, spiked to $263 in October 2007
when oil prices hit an all-time high of $140 a barrel. A repeat of
that scenario would take PetroChina's market value north of $350
A continuing acquisition spree helps PetroChina to overtake Exxon
Mobil in four to five years as the world's largest publicly-traded
5. BHP Billiton (NYSE:
BHP's exposure to a wide range of commodities helped this stock
rise 150% in 2010.Commodity prices are rising on expectations that
global economic growth will accelerate in 2011 and 2012 and demand
will outstrip supply for many metals and minerals. But it's hard to
make a case for a much higher spike incommodity prices. After all,
firming prices have led to production increases in past economic
cycles, capping any further gains. And as noted above, the
Chineseeconomy may experience a hangover in the future, which would
dramatically alter the supply and demand equation.
Shares of BHP Billiton continue to appreciate -- but a much more
modest pace, and the company's market value fails to crack the $300
Action to Take -->
The Industrial and Commercial Bank of China could occupy the No. 1
perch five years from now. Google, Petrobras and China Construction
Bank are knocking on the door. One of these firms is likely to end
up on the leader board five years from now. My money is on
Petrobras. The oil giant's massive R&D program should
eventually set the stage for surgingcash flow . [Read more of
analysis of Petrobras here
-- David Sterman
Disclosure: Neither David Sterman nor StreetAuthority, LLC hold
positions in any securities mentioned in this article.
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