Recently, Barron’s released the world’s most respected companies, featuring 100 companies. These businesses had high rankings following several characteristics including strong management, ethical business practices, sound business strategy, stock-price performance and revenue growth. Around 38% of survey respondents commented that the sound business strategy is the most important thing. Strong management ranked second, with 22% of the respondents’ answers, while 21% of the total respondents agreed that the ethical business practices are the key.
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%.