26 December 2007

America's best big companies : Sify Finance

America's best big companies
Article sources : From Forbes.com thro Sify.com

This is our 10th year of selecting the 400 Best Big Companies in America. Our methodology for choosing the winners is so stringent that 165 companies from last year's 400 did not make the cut for 2008. Not only must companies pass our benchmarks for financial growth rates and returns, they must also meet our approval for their corporate governance, accounting standards and background checks.

As a group, our latest roster of Platinum 400 companies looks more like fast-growing upstarts than established, big, corporations. The median company on the list shows 16% sales growth and 28% earnings-per-share growth over the latest 12 months. As an investment, the median Platinum company on this year's list has a 12-month gain of 15%, versus 6% for the S&P 500 index.

We assign each Platinum 400 company to one of 26 industries; from each industry, our writers and editors then select a top-tier corporation as the best-managed company in that industry. In making their selections, our editorial staff considers not only our initial financial and quality screens, but also subjective factors such as management ability, innovation and leadership. From these 26 companies, our staff also picks the Forbes Company of the Year.

Our editors' choice for the company of the year: Nvidia. Co-founded by CEO Jen-Hsun Huang in 1993, the chip maker has gone on to regain the lead in the lucrative market for graphic processors aimed at hardcore gamers. Its annualized five-year results are impressive, too: sales growth of 15%, earnings per share of 36%. Over the same period, Nvidia shareholders profited from a 42% annualized total return. Nvidia is now racing to develop its next generation of chips as it faces new challenges fromIntel and Advanced Micro Devices.

What about the other 25 industries? In chemicals, we cite Mosaic as the best-managed of the group. The $6 billion (revenues) Minneapolis fertilizer manufacturer was forbed by the 2004 combination of IMC Global and the Crop Nutrition division of Cargill, a private company.
Mosaic took restructuring charges in May 2006 related to closing its higher-cost phosphate operations, and this write-off led to a loss for fiscal 2006. The restructuring--and higher fertilizer prices--helped Mosaic deliver profits of $616 million on revenue of $6.5 billion in the last 12 months. In its most recent quarter, through August 2007, Mosaic pre-paid $700 million in long-term debt; debt-to-capital now stands at 24%, versus 34% in the prior August quarter.
Our best-managed choice in food, drink & tobacco is PepsiCo.Chief Executive Indra Nooyi is looking abroad to growing economies such as China, India and Russia. Another PepsiCo focus is on healthier initiatives for its beverages and snacks, such as developing a low-calorie Gatorade, cutting trans fats, and selling chips that are baked instead of fried, plus Flat Earth, a line of fruit and vegetable crisps.

PepsiCo is a member of our platinum honor roll, a select list of 21 companies that have appeared on the Platinum 400 in each of the past 10 years. Another feature highlights the 10 out of 165 newcomers that have produced the best annual total return over the past five years.

Our comeback companies report acknowledges some of the corporations that have returned to the Platinum 400 after an absence of one or more years. Among them are AAR and Arrow Electronics, both of which are making their first appearance on the list since 1999.
Finally, we look at stock market returns for the 2007 Platinum 400. Over the past 12 months, last year's list of the 400 Best Big Companies in America has a 4% median price gain, two percentage points below the performance of the S&P 500. Our narrower selections of best-managed companies--one from each of 26 industries--fares much better, with a 19% median increase.

In Pictures: America’s Hot Companies

We cannot claim our current list of 400 companies will top the performance of Wall Street indexes over the next 12 months, but our list can be a useful starting point for selecting individual stocks. After all, they have already passed our strict standards to be named among the Best Big Companies in America.

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