THE 25 MOST IM­POR­TANT COM­PA­NIES IN THE WORLD

Why they mat­ter and how you can in­vest

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There are many ways to build a list that ranks the most im­por­tant com­pa­nies to peo­ple. In its most straight­for­ward sense, for in­vestors that are still in work, your em­ployer or own busi­ness is al­most cer­tainly the most im­por­tant com­pany to you since they pro­vide your source of in­come and con­tribute to your pen­sion sav­ings too.

Those in re­tire­ment might equally ar­gue the case for the holder of their pen­sion funds, or the fund man­agers with whom the bulk of their sav­ings sit.

You could even make a firm case for the sup­pli­ers of cer­tain prod­ucts that fill your kitchen and bath­room cup­boards or cab­i­nets. Brands such as Domestos, Fairy, Heinz or Col­gate would sup­port claims for

Unilever (ULVR), Proc­tor & Gam­ble, Kraft Heinz and Col­gate-Pal­mo­live re­spec­tively.

What about the sup­pli­ers of core elec­tric­ity, gas and wa­ter ser­vices, the op­er­a­tor of the trains that get you to work ev­ery day, your mo­bile phone net­work or per­haps, for some, the brewer of your favourite pint?

More typ­i­cal ways to rate the rel­e­vance of the world’s top com­pa­nies tend to con­cen­trate on other fac­tors; they might judge by mar­ket value, brand strength or sales rev­enue, and all of these are bona fide ways to rank the im­por­tance of busi­nesses.

US pub­li­ca­tion For­tune even pro­duces a list of the world’s most ad­mired com­pa­nies. Ap­ple, Ama­zon and Al­pha­bet (Google’s par­ent) oc­cu­pied the top three po­si­tions in the 2018 vote, with Star­bucks and FedEx also in the top 10, which might raise an eye­brow or two.

WHO IS IM­POR­TANT TO SHARES READ­ERS?

Ev­ery year For­tune puts to­gether a separate list of the top 500 global com­pa­nies based on how much rev­enue each gen­er­ates. Only 20 UK com­pa­nies fea­tured in 2017’s edi­tion, down from 24 in the pre­vi­ous year, in a list pre­dictably dom­i­nated by US (126) and Chi­nese com­pa­nies (111), with Ja­pan (52), Ger­many (32) and France (28) also prom­i­nent.

We’ve had to think glob­ally to pro­duce our list of the world’s best com­pa­nies, pick­ing 25 en­ter­prises that we think have sweep­ing in­flu­ence on the day-to-day lives of UK in­vestors, and Brits in gen­eral. Our method­ol­ogy is in­clu­sive of some tra­di­tional met­rics, such as scale and value, but with some sub­jec­tiv­ity thrown into the mix.

Each se­lected com­pany has been as­sessed on a num­ber of fac­tors and placed into what we be­lieve is the most rel­e­vant group­ing. There are three core sets – Main­stays, En­dur­ing Brands and Dis­rup­tors.

Main­stays are com­pa­nies that have been around for years pro­vid­ing ser­vices or goods that we can’t live with­out, and are likely to need in the years to come. These are not nec­es­sar­ily ex­clu­sive sup­pli­ers but they do, in our view, ex­ert the most in­flu­ence over peo­ple in the UK within a cer­tain area.

En­dur­ing Brands can be best de­scribed as sup­ply­ing us with in­stant fa­mil­iar­ity, where we know what we are get­ting im­me­di­ately. Nike and Walt Dis­ney are great ex­am­ples where the name alone tells you pretty much ev­ery­thing you need to know. Per­haps McDon­ald’s is the best il­lus­tra­tion, a restau­rant chain where you could take a 10-year old child and they will know in­stantly what’s on of­fer.

Dis­rup­tors are com­pa­nies that are ei­ther trans­form­ing ex­ist­ing busi­ness mod­els, chang­ing es­tab­lished prac­tices, or are carv­ing en­tirely new in­dus­try niches to ex­ploit.

Think how Ama­zon has rev­o­lu­tionised buy­ing stuff eas­ily and cheaply on­line, or how Uber and Airbnb are turn­ing ur­ban mo­bil­ity and the rooms for rent space on their heads.

Twenty years ago few peo­ple main­tained friend­ships and con­nec­tions on the in­ter­net (we’ll give a mod­est nod here to Mys­pace, re­mem­ber it?). Now you can barely es­cape Face­book, which vir­tu­ally in­vented so­cial me­dia as we know it to­day, and a mil­lion sim­i­lar plat­forms.

A FUN PEEK INTO THE FU­TURE

There is a fi­nal bunch of com­pa­nies on our list un­der the cat­e­gory of To­mor­row’s World. We’ve stuck our necks out by pre­dict­ing a hand­ful of po­ten­tial su­per­star in­flu­encers for the decade ahead. These are all pri­vately owned, ven­ture cap­i­tal­backed busi­nesses so ac­cess for re­tail in­vestors to­day is lim­ited, although we have tried to pro­vide names of funds that do own stakes where rel­e­vant.

To state the ob­vi­ous, this is any­thing but a com­pre­hen­sive col­lec­tion of the world’s most im­por­tant com­pa­nies. A list 10 times as long would still strug­gle to cover all bases. Some may be prom­i­nent stock picks in your own port­fo­lio, or held by funds or in­vest­ment trusts you hold. Oth­ers may seem com­pletely ir­rel­e­vant to you.

In ei­ther case, why not send us some of the com­pa­nies that are most im­por­tant to you, via email at ed­i­to­rial@shares­magazine.co.uk with the sub­ject line ‘Best Com­pa­nies’.

We haven’t in­cluded Net­flix on the list of the world’s best com­pa­nies be­cause we don’t think its propo­si­tion is unique enough and we’re not sure where it goes next strate­gi­cally, be­yond sign­ing up more sub­scribers. A move into mu­sic stream­ing would be a nat­u­ral ex­ten­sion, but Ama­zon has al­ready beaten it to this game.

The stream­ing mar­ket is evolv­ing and com­pe­ti­tion is likely to in­ten­sify. Net­flix is burn­ing cash and has sig­nif­i­cant fi­nan­cial li­a­bil­i­ties, plus there are no bar­ri­ers to stop cus­tomers can­celling their sub­scrip­tions.

It has man­aged to sweep up masses of new cus­tomers be­cause the price point is low. At some point it will have to be more ag­gres­sive with pric­ing or ac­cept ad­ver­tis­ing which may be a big turn-off for a large chunk of its au­di­ence. (DC)

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