Business insiders recently unveiled their most admired companies. The corporations topping the list are thought of as leaders in their respective fields. But does the love affair a business insider has with a company inevitably equal a great investment for you and me?Â
Best of the best
The Fortune survey solicited executives, directors, and analysts to rate companies on nine criteria. Respondents were asked to select the 10 companies they admired most.
Here are the ones insiders consider the cream of the crop.
| Rank | Company | 1-Year Stock Return | Motley Fool CAPS Rating (out of 5) |
|---|---|---|---|
| 1 | Apple Inc. (NASDAQ:AAPL) | (19%) | **** |
| 2 | Google Inc (NASDAQ:GOOG) | 40% | **** |
| 3 | Amazon.com, Inc. (NASDAQ:AMZN) | 15% | ** |
| 4 | The Coca-Cola Company (NYSE:KO) | 11% | ***** |
| 5 | Starbucks Corporation (NASDAQ:SBUX) | 15% | **** |
| 6 | International Business Machines Corp. (NYSE:IBM) | 1% | **** |
| 7 | Southwest Airlines Co. (NYSE:LUV) | 72% | *** |
| 8 | Berkshire Hathaway Inc. (NYSE:BRK.A) | 34% | ***** |
| 9 | The Walt Disney Company (NYSE:DIS) | 49% | ***** |
| 10 | FedEx Corporation (NYSE:FDX) | 12% | **** |
Sources: Fortune, Yahoo! Finance, The Motley Fool.
Not surprisingly, perched at the top of the list is Apple Inc. (NASDAQ:AAPL), a company greatly admired for its status as an innovative leader in digital lifestyle solutions. Even though Apple Inc. (NASDAQ:AAPL) has received criticism in response to its capital allocation strategies, many business insiders agree that Apple Inc. (NASDAQ:AAPL) is in an enviable position because of its pristine financials and gobs of balance sheet cash.
Coffee giant Starbucks sits a few notches down on the list. Transforming the way the world experiences coffee, Starbucks Corporation (NASDAQ:SBUX) still possesses a great deal of international growth potential. And according to CEO Howard Schultz, with its Teavana acquisition, Starbucks Corporation (NASDAQ:SBUX) “intends to do for tea what it’s done for coffee”.Â
The Coca-Cola Company (NYSE:KO) is continually admired for its blockbuster brand. And though U.S. soda consumption is declining, The Coca-Cola Company (NYSE:KO) is successfully reinventing itself into the world’s premier beverage (not exclusively soda) company. It comes as no surprise that key insiders admire Berkshire Hathaway, with Warren Buffett widely considered the planet’s best-regarded businessman. And Disney probably appears in the top 10 because of the company’s diversified stream of revenues and ability to produce seemingly endless billion-dollar movie franchises. The Coca-Cola Company (NYSE:KO), Berkshire, and The Walt Disney Company (NYSE:DIS) are all crowned five stars (out of five) in our Motley Fool CAPS community.
But are these companies good investments?
Whether the companies are worthy of your investment dollars is a story that stock return data will tell. During the past year, only four of these 10 companies outperformed the broad stock market. No. 2 Google Inc (NASDAQ:GOOG), No. 7 Southwest Airlines Co. (NYSE:LUV), No. 8 Berkshire Hathaway Inc. (NYSE:BRK.A), and No. 9 The Walt Disney Company (NYSE:DIS) beat the S&P 500’s 20% return over that same period.
But when looking at a longer snapshot of time, eight of these 10 companies outperformed the market during the past five years (the exceptions were Southwest Airlines Co. (NYSE:LUV) and FedEx). The most noteworthy performers were No. 5 Starbucks, No. 3 Amazon.com, Inc. (NASDAQ:AMZN), and No. 1 Apple Inc. (NASDAQ:AAPL), whose stocks returned 292%, 256%, and 150%, respectively, over the past five years, compared with the S&P 500’s 20% return during the same period.
Foolish takeaway
By and large, the companies that insiders believe are admirable really are good investments. Most of them significantly outperformed the S&P 500. But it’s important to remember not to take the word of any “experts” as the last word.
The article 5 Companies Key Business Insiders Love originally appeared on Fool.com is written by Nicole Seghetti.
Fool contributor Nicole Seghetti owns shares of Apple and FedEx. Follow her on Twitter: @NicoleSeghetti. The Motley Fool recommends Amazon.com, Apple, Berkshire Hathaway, Coca-Cola, FedEx, Google, Southwest Airlines, Starbucks, and Walt Disney and owns shares of Amazon.com, Apple, Berkshire Hathaway, Google, IBM, Starbucks, and Walt Disney.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
