The 5 Most Valuable Stocks on the Planet

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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 ( GDP ) 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 the planet...

Company (ticker) Market cap. ($M) Description
Exxon Mobil Corp. ( XOM ) 396,900 World's largest non state-owned oil and gas firm.
Apple Inc. ( AAPL ) 313,751 Nine straight years of at least 28% sales growth for this tech giant.
Ind. and Comm'l Bank of China ( HK ) 261,039 Largest of China's four quasi state-owned banks.
PetroChina Co. Ltd. ( PTR ) 254,610 Aggressive acquirer of foreign oil fields.
BHP Billiton Ltd. (BHP) 252, 323 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. GE (NYSE: GE ) 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. Microsoft (Nasdaq: MSFT ) eventually overtook GE, but has since fallen to No. 6 in the world.

Just below Microsoft resides Brazil's energy titan Petrobras (NYSE: PBR ) and the China Construction Bank (OTC BB: CICHF) isn't far behind. [My colleague Ryan Fuhrman thinks Petrobras could be 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 world.
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: XOM )

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.

Prediction: ExxonMobil'smarket value will be less than $400 billion five years from now.

2. Apple (Nasdaq: AAPL )

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 Sony (NYSE: SNE ) 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, shares 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.

Prediction:
Apple'smarket value works its way toward the $400 billion mark before starting a long and steady decline that puts it back in Google (Nasdaq: GOOG ) 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 bank's market value 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.

Prediction: ICBC's market value swells to more than $400 billion at some point in the next five years, thanks to economic growth andcurrency appreciation .

4. PetroChina (NYSE: PTR )
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 billion.

Prediction: A continuing acquisition spree helps PetroChina to overtake Exxon Mobil in four to five years as the world's largest publicly-traded energy concern.

5. BHP Billiton (NYSE: BHP )
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.

Prediction: Shares of BHP Billiton continue to appreciate -- but a much more modest pace, and the company's market value fails to crack the $300 billion barrier.

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 Ryan's excellent analysis of Petrobras here ]


-- David Sterman


Disclosure: Neither David Sterman nor StreetAuthority, LLC hold positions in any securities mentioned in this article.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

© Copyright 2001-2010 StreetAuthority, LLC. All Rights Reserved.


This article appears in: Investing , Basics , International , Investing Ideas

Referenced Stocks: AAPL , GDP , HK , PTR , XOM

David Sterman

David Sterman

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