The World's Most Attractive Companies
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A few months ago I wrote about whether a group of companies that were deemed the worst companies to work for based upon an employee survey were also good to invest in. As it turned out most were not.
Now I will analyze some of the companies that were deemed to be the most desired to work for according to a survey of students around the world and determine whether or not it would be wise to invest in them. You can read more about the study here.
There were two lists published: one for engineering students and one for business. I'll look at five companies that were on both of them.
The top company on both lists was Google (NASDAQ: GOOG) which offers employees a great working environment at its "Googleplex" headquarters in Mountain View, CA. An employee can work out or swim before breakfast, do their laundry at lunchtime and play a piano during an afternoon break. The company has developed such products as the top-rated Internet search engine, a driverless car, the Nexus series of tablets and the number one mobile device operating system, Android.
Google stock has also offered investors a good opportunity. It has all the elements in place: solid revenue and earnings growth (if one takes more than just a short-term view) averaging more than 20% a year for the past five years, no debt, lots of free cash flow and great management. Those willing to hold on for the long haul have been rewarded. Over the last 10 years Google has provided a 590% gain, outperforming the market by 10:1.
Right behind Google on the engineering list was International Business Machines (NYSE: IBM). Big Blue, ranked 16 in the business survey, has successfully made the transition from the number one maker of personal computers to a leading provider of business and technical services to other companies. Although revenue has declined and earnings growth has slowed a bit over the past year it has been projected to pick up again. Somewhat of a negative is a relatively high debt level. However, it has consistently maintained a high level of free cash flow over the recent past. It might be a stock to consider as more and more companies will need the kind of Cloud-based products that IBM offers.
A company in the top ten on both lists was Procter & Gamble (NYSE: PG). The maker of Gillette razors, Crest toothpaste and Pampers diapers is attracting top-notch engineering talent as well as the more traditional MBA students.
Innovation in consumer products, maybe an example would be the individual packet of Tide laundry detergent now available, may provide the spark needed for the company to revitalize its sagging growth rates. Over the last few years EPS growth, for example, has slowed significantly. However, P&G has experienced this in the past and a saving grace has been an impressive record of steadily increasing dividend payouts over the last half century which has helped boost its overall return through the years.
Ranked third in engineering and fourth in business was the software giant Microsoft (NASDAQ: MSFT). The company just released its latest version of the Windows operating system and a brand new tablet device, called the Surface.
It was once the world's most valuable until the Internet bubble hit in early 2000. Can an influx of bright students get the company, founded by Harvard dropout Bill Gates, moving again? With the PC industry crashing Windows 8 may have a lot to overcome unless a lot of people upgrade from the previous version. Microsoft may have better luck in mobile with the Surface and the operating system for the Windows phone.
Maybe somewhat surprisingly ranked further down on the engineering list than one would have thought (and not even in the top ten for business), was Apple (NASDAQ: AAPL). The Cupertino, CA based company is the maker of the iconic iPod, iPhone and iPad as well as a bevy of desktops and laptops.
Its once high flying stock has taken a beating lately as a string of negative publicity over the past two months has resulted in investors driving down shares into full correction territory.
Earnings less than analysts estimates, a high-level management shakeup, reported production bottlenecks with the latest iPhone, and complaints about its new Maps app all contributed to the sell-off. Some analysts also theorized that the looming "fiscal cliff" is not helping matters as many shareholders want to take profits this year and pay a lower tax rate on them.
Apple shares are still a good value however. Backing out its huge cash position, which is around $120 billion, the P/E ratio is below 15 on a TTM basis, in-line with the recent past. Record revenue and earnings are possible for the upcoming holiday shopping season as Apple has now upgraded all of its product line over the last few months and consumers have a lot to choose from. Looking further out don't forget the impact the company might make in the entertainment industry. The proverbial bull in the china shop is the anticipated iTV.
So do the students know something? Do they want to work for the stodgy, low-growth company or do they want to perform for the innovative high-flier? I'd bet these top-notch people would rather do the latter.
Mathman6577 owns shares of Apple, The Procter & Gamble Company, and International Business Machines. The Motley Fool owns shares of Apple, Google, International Business Machines, and Microsoft. Motley Fool newsletter services recommend Apple, Google, International Business Machines, Microsoft, and The Procter & Gamble Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.