Scott DeCarlo, Forbes Staff
These Global High Performers has been expanding their earnings at 23% annually and returned an average 16% to shareholders over the past five years. To find such examples, we did a careful search of the Forbes Global 2000–our list of the world’s largest companies based on a composite ranking of sales, profits, assets and market value–in order to identify companies that are global superstars in every sense.
We analyzed 26 industries (excluding trading companies) of the Global 2000 and scored each company on long-term and short-term sales growth, profit growth, return on capital and total return to shareholders. We also factored in earnings forecasts and used outside research to help weed out seemingly strong but dicey entities. Once we generated our industry-specific rankings of fast-growing global companies, we carefully went through each industry to select the best five companies in each group. Companies must have sales of at least $1 billion and positive equity. Non-U.S. companies must trade in the U.S. as ordinary shares or American Depositary Receipts.
These companies are considered global for a few reasons–they trade in the U.S. as well as trade in their local market and earn an average 56% of their sales outside their domestic country. These global firms, India’s Infosys Technologies, Israel’s Teva Pharmaceuticals and U.S.-based First Solar, generate a majority of their sales outside their homeland.
Almost half of the companies on this year’s list are returning from last year. Among this group— América Móvil of Mexico, controlled by the world’s richest man Carlos Slim, with average five-year sales and earnings growth over 20% and U.S.-based MasterCard, with an average five-year earnings growth of 61%.
As a group, the five companies in the Chemicals industry-BASF, Mosaic,Potash of Saskatchewan, Syngenta and Yara International–has the best five-year annualized total return (32%). The Technology industry as a group has the best five-year average sales (52%) and earnings (46%) growth-Amphenol, Apple, First Solar, Western Digital and Research in Motion. According to Thomson Reuters IBES consensus estimates, the Consumer Durables industry as a group-BMW Group, Johnson Controls,Michelin Group, Tata Motors and TRW Automotive Holdings-are expected to see earnings grow the most annually over the next three-to-five years (32%).
There is value on this list for investors. We looked at price to book value. The metric may not be perfect, but it’s one that many value investors and contrarians use in their research. Book value, roughly speaking, is a company’s assets less its liabilities. So the lower the price-to-book ratio, the cheaper a company looks relative to its net worth. The price-to-book multiples for these three stocks are all under 1.0 and stand at a discount to five-year historic averages—Hong Kong’s Swire Pacific, France’s GDF Suez and U.S.-based BlackRock.
On average, last year’s list of Global High Performers are up 17% over the past year, outperforming the S&P 500 (up 14%) over the same time period. priceline.com, McDermott International and Genting led all companies in price performance.
On our list, 69 of the 130 companies have headquarters outside the U.S. and includes global brand names, such as Spain’s Telefónica, Nestlé(Switzerland) and Christian Dior (France); as well as foreign companies with lower profiles, such as Denmark biotech, Novozymes. Among notable U.S. Global High Performers are Walt Disney, Google, McDonald’s, andNike.