Friday, January 16, 2009

The Iron Men of Stocks - Top 20 Innovators of the Innovation Index

Company Name

Symbol

Market Cap

52w Price Change (%)

Return On Investment (5 Yr Avg) (%)

5y Revenue Growth Rate

5y Net Income Growth Rate

5y EPS Growth Rate


Accenture Ltd.

ACN

23.54B

0.73

52.94

13.57

27.70

20.30


Apollo Group, Inc.

APOL

14.23B

12.64

48.42

18.58

15.51

17.11


Genentech, Inc.

DNA

89.53B

22.34

15.14

35.32

112.58

111.77


General Mills, Inc.

GIS

19.86B

6.63

8.40

5.38

7.14

8.86


McDonald's Corporation

MCD

66.50B

10.75

9.44

8.14

18.67

20.01


Rohm and Haas Company

ROH

11.83B

27.38

7.26

9.21

25.74

27.01


Wal-Mart Stores, Inc.

WMT

202.25B

7.69

14.04

10.34

10.51

12.47


Waste Management, Inc.

WMI

15.89B

4.19

6.00

3.49

7.24

10.89


Only 8 U.S. businesses, worth at least $10 billion in market cap, provided positive returns in 2008! In a year when Dow Jones was down 33.84%, S&P 500 was down 38.49% and NASDAQ was down 40.54%, these Iron Men of Stocks provided positive returns! This is absolutely phenomenal. If these bellwethers can stay positive in this greatest recession of our times, they are bound to perform even better when the markets rebound. Would they?


On an average, these Iron Men provide returns of over 20% every year. 6 out of the 8 companies provide an annual dividend also. 1 out of these 8 Iron Men, McDonald's, was the Top Innovator by stock performance of the Innovation Index in 2008. Are these 8 U.S. businesses our top picks for 2009? Are these the best investment options for 2009? It depends. Whereas these companies may not provide the best returns in 2009, if and when the markets do rebound, they could provide a positive return and help you against further downturn. They are proven!

So, we announce our top 6 innovative companies for 2009! These Iron Men are our top 6 innovators for 2009 (2 innovators: Rohm and Haas and Genentech are in the process of getting acquired in 2009). These top 8 Innovators find ways to grow their business annually - average of 13% annual revenue growth, improve their earnings per share annually - average EPS growth of 28.55% annually, provide positive stock returns in a downturn - average return of 11.54% during the last 52 weeks, and adequate cash per share to grow their business that helps them survive the downturn - average cash per share of $2.36 per company.

Who will round out the Top 20 Innovators? 14 new innovators will be announced early next week to complete our Top 20 Innovators for 2009.

Here is a brief summary of each innovator (from Google Finance):

Accenture Limited (Accenture) is a management consulting, technology services and outsourcing organization. The Company’s business is structured around five operating groups, which together comprise 17 industry groups serving clients. The operating groups of the Company are Communications & High Tech, Financial Services, Products, Public Service and Resources

Apollo Group, Inc. (Apollo Group) is a private education provider. The Company offers educational programs and services at the high school, undergraduate and graduate levels online and on-campus through its wholly owned subsidiaries, The University of Phoenix, Inc. (University of Phoenix), Institute for Professional Development (IPD), The College for Financial Planning Institutes Corporation (CFP), Western International University, Inc. (Western International University), and Insight Schools, Inc. (Insight Schools), and through its 80.1% owned subsidiary, Apollo Global, Inc. (Apollo Global). The Company has also established a Canadian institution, Meritus University (Meritus), which began operations in September 2008

Genentech, Inc. (Genentech) is a biotechnology company that discovers, develops, manufactures and commercializes pharmaceutical products to treat patients with unmet medical needs. It commercializes multiple biotechnology products and also receives royalties from companies that are licensed to market products based on the Company’s technology. Genentech commercializes various products in the United States, including Avastin, Rituxan, Herceptin, Lucentis, Xolair, Tarceva, Nutropin, Activase, TNKase, Cathflo Activase, Pulmozyme and Raptiva. The Company’s licensed products include Trastuzumab, Rituximab, Bevacizumab, Dornase alfa, recombinant, Alteplase and Tenecteplase, Somatropin, Daclizumab, Ranibizumab, Etanercept, Adalimumab and Infliximab. As of July 21, 2008, Roche Holding Ltd. held a 55.9% interest in Genentech, Inc., a biotechnology company. Note: Roche Holding Ltd. announced plans to acquire all of Genentech on July 21, 2008.

General Mills, Inc. (General Mills) is a manufacturer and marketer of branded consumer foods sold through retail stores. The Company is a supplier of branded and unbranded food products to the foodservice and commercial baking industries. General Mills manufactures its products in 16 countries and market them in more than 100 countries. Its joint ventures manufacture and market products in more than 130 countries and republics worldwide. The Company’s major product categories in the United States are ready-to-eat cereals, refrigerated yogurt, ready-to-serve soup, dry dinners, shelf stable and frozen vegetables, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grain, fruit and savory snacks, microwave popcorn, and a variety of organic products including soup, granola bars, and cereal. General Mills operates in three operating segments: U.S. Retail; International; and Bakeries and Foodservice.

McDonald’s Corporation primarily franchises and operates McDonald’s restaurants in the food service industry. These restaurants serve a varied, yet limited, value-priced menu in more than 100 countries around the world. The Company also has a minority ownership interest in United Kingdom-based Pret A Manger. The Company owned Boston Market prior to its sale in August 2007. During the year ended December 31, 2006, the Company disposed of its investment in Chipotle Mexican Grill (Chipotle). All restaurants are operated either by the Company, by independent entrepreneurs under the terms of conventional franchise arrangements (franchisees), or by affiliates and developmental licensees operating under license agreements. During the year ended December 31, 2007, McDonald’s Corporation sold its businesses in Brazil, Argentina, Mexico, Puerto Rico, Venezuela and 13 other countries in Latin America, and the Caribbean to a developmental licensee organization. Note: McDonald's was a Top 20 Innovator in 2008.

Rohm and Haas Company is a specialty materials company. The Company operates through seven segments: electronic technologies, display technologies, primary materials, paint and coatings materials, packaging and building materials, performance materials group and salt. On June 15, 2007, the Company acquired the Eastman Kodak Company’s light management films technology business, which produces advanced films that improve the display of liquid crystal displays (LCD). On November 30, 2007, it acquired a 51% ownership interest in a joint venture formed with SKC, Co. Ltd. In April 2008, the Company acquired Gracel Display, Inc., a developer and manufacturer of organic light emitting diode (OLED) materials. In April 2008, the Company also completed the acquisition of the FINNDISP polymer dispersions division of OY Forcit AB. Note: In 2008, Dow Chemical announced plans to acquire Rohm and Haas Company.

Wal-Mart Stores, Inc. (Wal-Mart) operates retail stores in various formats around the world. The Company earns the trust of its customers every day by providing an assortment of merchandise and services at every day low prices (EDLP), while fostering a culture that rewards and embraces mutual respect, integrity and diversity. Wal-Mart’s operations comprise three business segments: Wal-Mart Stores, Sam’s Club and International. Its Wal-Mart Stores segment is the largest segment of the Company’s business, accounting for 64% of its net sales, during the fiscal year ended January 31, 2008 (fiscal 2008), and operates stores in three different formats in the United States, as well as Wal-Mart’s online retail operations, walmart.com. Its Sam’s Club segment consists of membership warehouse clubs in the United States and the segment’s online retail operations, samsclub.com. Sam’s Club accounted for 11.8% of the Company’s net sales during fiscal 2008. Note: Wal-Mart was a Top 20 Innovator in 2007 and 2006.

Waste Management, Inc. (WMI) is a provider of integrated waste services in North America. Through its subsidiaries the Company provides collection, transfer, recycling, disposal and waste-to-energy services. WMI’s customers include commercial, industrial, municipal and residential customers, other waste management companies, electric utilities and governmental entities. The Company operates in six operating groups, of which four are organized by geographic area and two are organized by function. The geographic groups include WMI’s Eastern, Midwest, Southern and Western Groups, and the two functional groups are its Wheelabrator Group and WM Recycle America (WMRA) Group. The Company also provides additional waste management services that are not managed through its six Groups. These services include in-plant services, methane gas recovery and third-party sub-contracted and administrative services.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

The Innovation Index Reports

Introducing The Innovation Index
Annual Report 2007 - The Innovation Index gains 66%
Measuring Business Innovation Success
Innovation Index Group BUY Recommendations
Q1 2008 Report - Innovation Index ahead of S&P 500
Q2 2008 Report - Top Innovators Deliver
The Innovation Index Fund FAQ
Top 50 Innovative Companies in the world
Annual Report - Chapter One - Total Innovation Activity
Annual Report - Chapter Two - The Top Innovator
Annual Report - Chapter Three - The Innovation Insights
Innovation and Stock Performance Correlation
Future earnings guidance, A leading indicator
Smart Investing In Tough Economic Times
To Sell Or Not To Sell - You Decide
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies

About the Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America. The Innovation Index was down 38.72% in 2008 based on equal investment in each innovator of the Innovation Index. The Innovation Index returned 66% in 2007 based on performance model*. The Innovation Index would have returned 174% over the previous five years (2002-2006) based on historical model*. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001. An average of $100 invested in The Innovation Index on December 31, 2001 returned $454 as of December 31, 2007. By comparison, $100 invested in S&P 500 returned 28% or $129, $100 invested in NASDAQ returned 34% or $136, and $100 invested in the Dow Jones Index returned 30% or $131 through December 31, 2007.

Alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NASDAQ: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

The Innovation Index will analyze the positions and standings of the Top 20 Innovators at the end of each year.

About Innovation Index Group:

Innovation Index Group, Inc. systematically identifies, tracks, researches and analyzes the most innovative publicly traded companies in North America – collectively called the Innovation Index. Over the past six years, the Innovation Index would have generated a gross average annual return of 40% based on historical model.* The Innovation Index returned 66% in 2007* based on performance model, and was down 38.72% in 2008*.

Disclaimer: Innovation Index Fund invested in the stocks comprising The Innovation Index, and is currently closed.
*Past Performance Does Not Guarantee Future Results. Investments are not FDIC insured, do not have bank guarantee, and may lose value including principal. Please consult your financial adviser before making any investments.

References:
Stock screener: Courtesy of Google Finance
Company summary: Courtesy of Google Finance

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