Back in 2012, Kiplinger polled investing experts to identify the world’s best stocks – companies so full of promise that you’d want to own them for years to come. Although there will always be short-term setbacks and triumphs, the bulk of the original recommendations continue to be sound investments and have a place in most portfolios.
However, for investors who have not yet acquired these stocks, some remain bargains while others have become pricey. It may be smart to put the more expensive stocks on your watch list to buy when share prices dip. Here’s an update on the world’s ten best stocks.
Stocks are presented in alphabetical order. All 52-week price ranges, growth projections and other company data are as of February 4, 2014, unless otherwise indicated.
The World's 10 Best Stocks
Headquarters: Los Angeles
52-Week Range: $25.13 - $33.57
Annual Sales: $796 million
Projected Earnings Growth: 29.5% annually over the next five years
Launched by Steven Udvar-Hazy and John Plueger — the dynamic duo that helped turn International Lease Finance Corp. into the industry behemoth in the 1980s — Air Lease (AL) owns 182 planes and has signed agreements to lease them to 79 airlines in 45 countries. Air Lease also helps broker and manage air fleets. So as U.S. airlines upgrade to more fuel-efficient planes, the company can broker their older models to airlines in developing countries, where rising middle-class populations are fueling growth in air travel, says Matt Berler, chief executive of Osterweis Capital Management.
Just three years old, Air Lease is growing at a blistering pace, and it is expected to keep pushing both revenues and profits up by 30% annually for the next several years. “This company has the best management in the aircraft-leasing business,” says Jason Arnold, analyst with RBC Capital Markets.1. Air Lease
Headquarters: Cupertino, Cal.
52-Week Range: $385.10 - $575.14
Annual Sales: $174 billion
Projected Earnings Growth: 19.6% annually over the next five years
Talk about a roller-coaster ride. Apple (AAPL) led Kiplinger’s list of top stocks way back in January 2011, when it was priced at a mere $330. The shares rose to more than $700 in the fall of 2012 before dropping to $385 in early 2013, when lackluster iPhone sales caused the company to miss earnings targets. After clawing its way back to $570 by the year-end, the stock dropped to $500 in early 2014 after quarterly iPhone sales fell short of projections.
But there’s still plenty to love about Apple, and dips can present buying opportunities for patient investors. Billionaire Carl Icahn has compiled a huge stake in Apple – he added another $500 million worth of the stock during a recent selloff — and he has called on Apple CEO Tim Cook to give more of the company’s $158.8 billion cash stockpile back to shareholders. If you couple that potential windfall with Apple’s track record of innovative new products, the long-term story remains enticing.2. Apple
52-Week Range: $74.27 - $144.57
Annual Sales: $86.6 billion
Projected Earnings Growth: 10.4% annually over the next five years
Boeing (BA) benefits from some of the same factors fueling growth at Air Lease. The aerospace company dominates the market for large commercial jetliners, along with Europe's Airbus Industries, and it saw revenues rise 6% to $86.6 billion in 2013. Despite some technical issues that have plagued its much ballyhooed Dreamliner 787, the company’s backlog is at an all-time high at $441 billion, five times annual sales. Boeing expects to deliver between 715 and 725 planes in 2014, up from a record 648 commercial deliveries the previous year.
The stock soared 77% in 2013, and at $122 it’s a touch pricey. But shares are worth watching to buy on dips, and it’s certainly a stock worth keeping for those who already own it.3. Boeing
Headquarters: Plano, Tex.
52-Week Range: $25.00 - $34.35
Annual Sales: $2.6 billion
Projected Earnings Growth: 15.0% annually over the next five years
The U.S. theater market may be relatively moribund, but growth prospects are good in emerging markets, where more and more people are entering the middle class and heading to the movies for entertainment. Cinemark (CNK) is one of the primary beneficiaries. The company operates 506 theaters in the U.S., Mexico, Brazil and 11 other Latin American countries. Growth over the past five years has been brisk. In the first nine months of 2013, revenues jumped 9.1% to $2 billion, though profits suffered because the company recorded a $72 million charge for retiring debt early.
The company has also grappled with weak Latin American currencies, which translates to money earned overseas getting exchanged for fewer bucks at home. But if those currency woes improve, Cinemark, one of the nation’s fastest-growing theater chains, could be primed for an earnings boost. Meanwhile, Marla Backer, an analyst for Ascendiant Capital Markets LLC, thinks Cinemark revenue will continue to soar, as the company capitalizes on the ability to sell more ads in Latin American movie theaters.4. Cinemark Holdings
Headquarters: Panama City, Panama
52-Week Range: $97.66 - $162.83
Annual Sales: $2.5 billion
Projected Earnings Growth: 23.8% annually over the next five years
U.S. airlines have to scratch and claw for every penny of profit they earn. Not so for Panama’s Copa Holdings (CPA), says Bob McAdoo, airline analyst with Imperial Capital, a Los Angeles investment firm. With a hub in the heart of Latin America, Copa has few direct rivals. That has allowed it to charge premium prices for its flights and to register operating profit margins of 15% to 20% year after year. Revenues continue to climb at double-digit rates.
As economies in Brazil and the rest of Latin America expand, Copa is likely to benefit because it gives travelers a convenient way to move around the region. Copa’s big advantage lies in the setup of Panama City’s airport, explains McAdoo. Panama treats connecting passengers as though they’re hopping on a domestic flight: There’s no trip through customs unless you leave the airport. That saves time, making the airport an ideal hub for business travelers in a hurry. Copa will fly to 69 destinations in 30 countries once it launches service to Montreal; Ft. Lauderdale, Fla.; and Georgetown, Guyana, in mid 2014.5. Copa Holdings
Headquarters: Washington, D.C.
52-Week Range: $57.61 - $78.80
Annual Sales: $18.8 billion
Projected Earnings Growth: 12.7% annually over the next five years
Danaher (DHR) used to be an industrial conglomerate made up of disparate cyclical businesses. Then in 1990, management opted to restructure to focus on five key areas in which it believed it could become a global leader. Today, its five major business segments are test and measurement, environmental, dental, industrial technologies and life sciences.
The wisdom of the strategy proved itself in 2009 as the nation struggled with the recession precipitated by the financial crisis, says Morningstar analyst Daniel Holland. Although revenues of many of its rivals were cut in half that year, Danaher saw its sales drop about 12% and bounce back nicely in 2010. Revenues and profits have continued to rise steadily – 2013 sales climbed 4.5% – pushing the share price 34% higher last year alone. The stock set an all-time high in January 2014, which has made it a little pricey. But with analysts expecting continuing growth, it’s a stock worth holding and watching to buy on downswings.6. Danaher
Headquarters: Fremont, Cal.
52-Week Range: $22.54 - $43.88
Annual Sales: $728 million
Projected Earnings Growth: 15.6% annually over the next five years
Investors who took our advice back in 2012 to buy a little-known manufacturer of controllers for color printers, Electronics for Imaging (EFII), have been well rewarded. The stock doubled in value in 2013. The company, which also makes printing software, continues to deliver double-digit gains in both earnings and revenue. Management expects to hit $1 billion in annual sales in 2016.
That said, the blistering growth rate is likely to slow as Electronics for Imaging matures, which makes a stock price north of $40 a reach. Sit tight at these levels, but if the opportunity arises to buy the stock at a lower price, it’s worth pursuing.7. Electronics for Imaging
Headquarters: Morris Township, N.J.
52-Week Range: $68.84 - $92.15
Annual Sales: $39.1 billion
Projected Earnings Growth: 10.4% annually over the next five years
The lone new addition to our list of the world’s greatest stocks is Honeywell International (HON), which replaces luxury-goods maker Coach. A manufacturer of everything from thermostats to jet engines, Honeywell has delivered on the promise of steady top- and bottom-line growth that it laid out in its five-year plan released in 2010. Last year, the company posted a 4% sales gain and double-digit earnings growth. The solid performance contributed to the stock’s 41% rise in 2013.
Looking ahead to 2014, management is forecasting another good year: a 3% to 4% sales gain and an 8% to 12% jump in earnings per share. According to Stifel Nicholas analyst Jeff Osborne, Honeywell is set to present a new five-year plan in March 2014 that he thinks will be even more ambitious than the last one and will act as a catalyst for the stock.8. Honeywell International
Headquarters: San Diego
52-Week Range: $59.02 - $75.90
Annual Sales: $24.9 billion
Projected Earnings Growth: 7.5% annually over the five years
It doesn’t matter who wins the smart-phone wars. Qualcomm (QCOM) provides the technology that powers virtually every manufacturer’s 3G and 4G devices. The company recently reiterated its forecast for a 5% to 11% sales gain for its fiscal year ending in September 2014, and it upped its earnings-growth forecast slightly, to 11% to 15% (from earlier guidance of 10% to 14%). Qualcomm plans to spend $3 billion buying back its stock during the current fiscal year, which will certainly benefit earnings per share.
The company continues to innovate, looking for ways to use its wireless technology to power all the devices in your home. With growth expected to remain brisk, a stock price in the neighborhood of $70 doesn’t look unreasonable right now.9. Qualcomm
52-Week Range: $69.08 - $94.91
Annual Sales: $45.3 billion
Projected Earnings Growth: 18.5% annually over the next five years
Energy-services giant Schlumberger (SLB) is the prototypical multinational. In 2013, the company derived roughly 70% of its revenues outside of North America, including from developing markets in Africa, Latin America and Asia. International revenues rose a healthy 11% last year, while North American revenues gained just 3%. With particular expertise in deep-water drilling, Schlumberger is well positioned to participate in the booming oil and gas exploration market around the globe.
Investors tend to discount energy companies, worried that the price of natural gas or crude could buffet the stocks. But prices are expected to remain fairly stable over the next year, and exploration is going gangbusters. That bodes well for Schlumberger, which is expected to grow profits at a double-digit clip over the next several years, and it makes the stock’s recent $87 price tag a relative bargain.10. Schlumberger