A look at the top 10 stocks; You should sell two now!

 

A million dollars, wisely invested, is enough to set you up for life, but in stock market terms, it doesn't mean much. A company needs to be worth 500 to 1,000 times that much before it is of much interest to Wall Street. The Street speaks in the language of billions, at least for today, though one company is already worth more than half-a-trillion. Interestingly, the most valuable company in the world is almost certainly Saudi Aramco, which is likely worth multiple trillions even today, but unless you are in the line of succession for the Arabian throne, you'll never have a slice of that pie.

Here then, from the top down, are the highest valued companies that trade on US markets today. For each company, we'll let you know what the prevailing outlook is among analysts, but we warn, as always, to take these views with a grain of salt – analysts, after all, work for the same brokerages that make markets in these stocks. Fortunately, that usually means that saying the opposite of what they think is counter to their self-interest. But if these conflicts of interest rarely cause opinions to flip, they still have an enormous impact on level of enthusiasm.

That is why I will tell you where I think the analysts are wrong; weight my input as you will. I almost certainly have some stake in some of these companies, as I own shares in some broad-based mutual funds, but I'm honestly not sure which. So while I might be right or wrong, my enthusiasm is entirely mine-own.

Apple (AAPL)

Market Cap: $650 billion

Analyst Opinion: Strong Buy = 17, Buy = 25, Hold = 9, Underperform = 1, Sell = 0. Analysts love Apple – but it is often the case that analysts are not as prompt as they should be when it comes to downgrading companies they like based on valuation, and that might very well have something to do with the huge AAPL positions held by brokerages and funds. Most analysts would be committing a sort of friendly-fire by downgrading AAPL. 

My Opinion: I love my iPhone 6+, I love iTunes, and I love ApplePay. I love the company, which is why I've been recommending it since it was cheap. If you just tuned in, it's not cheap anymore. I call this one a Hold.


Chart courtesy of stockcharts.com

Exxon Mobil (XOM)

Market Cap: $405 billion

Analyst Opinion: Strong Buy = 2, Buy = 7, Hold = 11, Underperform = 4, Sell = 0. Slightly more bullish than bearish in absolute terms, but this is one of the worst analyst opinion sections of any company on the list.

My Opinion: Refining high-cost fuel from low-cost oil has softened the damage being done to Exxon by the falling price of oil to some extent, but the price of fuel will fall too, it just takes about six months longer. Only then will we know how bad things really are for the energy colossus.

XOM is a Sell!


Chart courtesy of stockcharts.com

Microsoft (MSFT)

Market Cap: $402 billion

Analyst Opinion: Strong Buy = 5, Buy = 10, Hold = 17, Underperform = 3, Sell = 0. Mostly bullish

My Opinion: Microsoft is making some progress in the mobile and laptop arenas. Fortunately, it has plenty of income from Windows, and that's not going away. This is a Buy.


Chart courtesy of stockcharts.com

Google (GOOGL)

Market Cap: $378 billion

Analyst Opinion: Strong Buy = 17, Buy = 23, Hold = 7, Underperform = 0, Sell = 0. Not a single major analyst rates Google less than a Hold; 85% are Buy or Strong Buy. Not bad for a stock that hasn't done anything all year.

My Opinion: GOOGL should rally soon, so that's a Buy. GOOG, on the other hand, is a fake stock, which makes it a Sell.


Chart courtesy of stockcharts.com

Berkshire Hathaway (BRK.A)

Market Cap: $350 billion

Analyst Opinion: Strong Buy = 1, Buy = 1, Hold = 0, Underperform = 0, Sell = 0. If analysts seem disinterested, it is only because BRK.A is more like a mutual fund than a stock at this point. Still, the opinions that are here are good.

My Opinion: With BRK.A having just made a pretty big move up to $218,300 per share, Warren Buffet at 84 years old and Charlie Munger at 90, this may not be the very best time to leap aboard the Berkshire Hathaway bandwagon. Also, the company has a huge stake in Coca-Cola (KO), which I see struggling in coming years. I call this a Hold.

But take this to heart. Many books have been written about Warren Buffet. Read one.


Chart courtesy of stockcharts.com

Johnson & Johnson (JNJ)

Market Cap: $304 billion

Analyst Opinion: Strong Buy = 3, Buy = 6, Hold = 13, Underperform = 0, Sell = 0. Opinion is bullish, but somewhat weakly.

My Opinion: JNJ is one of only two stocks – the other being CVS (CVS) – that I have ever named the best stock on the market, and since Alex Gorsky became CEO in 2012, the company has been very successfully charting a path towards higher overall margins. Despite a recent run, I would Buy JNJ today.


Chart courtesy of stockcharts.com

Wells Fargo (WFC)

Market Cap: $279 billion

Analyst Opinion: Strong Buy = 7, Buy = 6, Hold = 13, Underperform = 1, Sell = 0. Analyst opinion is convincingly bullish, if as much so as some others on the list.

My Opinion: All big banks have seen their mortgage banking businesses dwindle in the last year, but Wells Fargo has continued to perform better than many of its peers. I'll say Buy here, since the company is solid, though I wouldn't really expect much capital appreciation in the next few months.


Chart courtesy of stockcharts.com

General Electric (GE)

Market Cap: $266 billion

Analyst Opinion: Strong Buy = 5, Buy = 5, Hold = 6, Underperform = 0, Sell = 0. Analyst opinion is pretty good.

My Opinion: General Electric operates huge business units in nearly every industry there is. It has had lean years in the past, mostly when it was led without much imagination and daring, though the company doesn't seem to have that problem today. Still, I feel it would take a lifetime for me to accurately analyze this company, and I don't trust anyone else to do it for me. Sorry, but, I can't venture an opinion here.


Chart courtesy of stockcharts.com

Walmart (WMT)

Market Cap: $255 billion

Analyst Opinion: Strong Buy = 4, Buy = 8, Hold = 16, Underperform = 1, Sell = 2. Bullish, but really pretty ambivalent.

My Opinion: This company isn’t going to break out of its current period of nearly flat earnings and revenue by issuing “Urgent” and “Confidential” memos to branch managers, nagging them, in effect, to remember to mark down food that is near expiration and to rotate dairy products on their shelves. Probably, these things have been going by the wayside because they are the least critical jobs of overworked managers in understaffed stores. The memo won't do one thing to change store revenue, but it provides a nasty glimpse into the chain's corporate culture. It also shows how scared the chain is of missing analyst revenue targets by a penny, not to mention how petty and utterly bereft of ideas the chain's executives are.

Disaster is brewing here. Sell! Sell! Sell!


Chart courtesy of stockcharts.com

Novartis (NVS)

Market Cap: $223 billion

Analyst Opinion: Strong Buy = 2, Buy = 0, Hold = 3, Underperform = 0, Sell = 0. Oddly bifurcated between very good and neutral.

My Opinion: Good pipeline, but Novartis hasn't been as profitable as I would have liked this year. Hold.


Chart courtesy of stockcharts.com

Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.

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