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Nine global titans

FEATURE: Nick Louth has scoured the globe to find you the best companies in their field
August 26, 2010

Now the most important bit: which shares to buy. We've identified a total of 15 foreign companies that give UK investors something unique that they cannot get in the UK. This week, we show you nine of them. Next week, we'll reveal the other six.

Apple

Innovation is at the core of Apple, from the iconic computers that first made the company's name to the iPod and iPhones which have made it the ultimate in technological cool. The money's pretty cool, too. Investors in Apple's IPO back in 1980 would have made more than $250 by today for every dollar they invested. The unending stream of innovations has created a real premium on its products. This translates into an excellent return on capital and equity, although still not quite as high as that of arch-rival Microsoft. Still, with Apple now worth more than its arch-rival, this is a fashion that is unlikely to end soon.

eBay

The excitement of eBay as a virtual car-boot sale may have peaked, but the power of the company remains undiminished. There are no serious rivals in its market space, and it has a huge and powerful web weapon in its ownership of PayPal, the fast-growing payment processing and web-handling software, which may ultimately go for a premium IPO. There’s also $7bn in cash on the eBay balance sheet, which amounts to a quarter of its market capitalisation. This is a rare moment to get hold of a technological leader whose scale provides an unbreakable rampart around its market niche.

Gazprom

Russia's Gazprom isn't necessarily the best-quality investment in the world, but considering its very unfair advantages, it is one of the cheapest. It owns 60 per cent of Russia's natural gas, or 17 per cent of the world's reserves. Being controlled by the Russian government means it will always come out ahead in the byzantine rules governing local energy deals. It's already the world's largest energy trader and, with a return of 20 per cent on capital, the most profitable. That is helped by having just a fraction of the debt of the typical oil and gas player. With global depositary receipts (GDRs) as well as American depositary receipts (ADRs), you can buy Gazprom without having to venture abroad.

Google

Google is the king of the Internet search. In 12 years since incorporation, Google founders Sergey Brin and Larry Page have made a reality of their mission to organise the world's information, and reaped billions in advertising dollars off the back of it. Although the core of their success is the search engine, there is now a rolling economy of scale to the company's operations that makes it hard for rivals to match. Since 2004, Google stock has quadrupled the rise in the S&P 500.

Intel

Intel is the world's dominant microprocessor maker, the leader in driving the ever-faster, ever-smaller computer brains. These have brought data-handling power out of the computer room and onto our desktops, phones and even washing machines and fridges. Despite weakening over the last decade, Intel shares have still outperformed the S&P 500 50-fold since 1980. This is a trend that has run and run, and despite the legal settlement with smaller rival AMD, there is really no other company that has the depth of innovation to play it.

Nintendo

If you've never heard of the Wii, then the power of Nintendo may have escaped you. The Japanese game designer and console maker is the most innovative company in the computer game industry, and for a company with such growth credentials is pretty cheap. It has outperformed the S&P 500 by 200 per cent since 1999, yet still yields 4 per cent. The return on equity over the past five years has averaged 18 per cent, and though it lost money in the second quarter, analysts' estimates put it on a PE ratio of 19.2 for the next financial year.

Petrobras

Brazil's Petrobras is another resource-rich oil company, with titanic reserves of 15bn barrels right on the doorstep of its own buoyant economy. With a PE ratio of nine, a net profit margin half as good again as the industry average at 18 per cent, and typical 15-20 per cent annual sales growth, it isn't surprising that the stock has doubled in the past five years. A $25bn fund-raising for the cost of developing its enormous deepwater fields has caused a little weakness in the share price, but only because it isn't certain yet what price the government will charge the company for acquiring those reserves.

Petrochina

The listed arm of China's giant China National Petroleum Corp, Petrochina was briefly the world's biggest company in 2009. It holds the full range of activities one would expect, from exploration to refining and from gas pipelines to petrochemicals and coal-bed methane. Reserves growth hasn't been fast, although news that it now has $60bn to spend on acquiring foreign companies and new reserves over the next decade will make it every bit as exciting as any western major. But what really sets it apart from the likes of BP and Shell is its downstream operations, supplying the world's fastest growing market for fuel. They pretty much guarantee a good performance.

Samsung

Already the world's largest TV producer, Samsung is expanding sales at twice the market rate, particularly in the US. With a good brand in smartphones and fingers in most other technology pies, this low-cost and efficient producer is a great play on the power of Korea's fast-expanding manufacturing base, and the recent strength of its currency. The dividend yield is about 1 per cent.

The numbers

NameMarketMarket cap ($bn)5 yr perf %PE ratioNet margin (%)ROE (%)TIDM
Apple NY 227440%18.725.431.5AAPL
Google NY 15568%2128.221.5GOOG
eBayNY28-47.50%11.327.919.3EBY
Intel NY 106-27%11.42322.3INTC
NintendoADR3497%1615.2n/aNTDOY
SamsungGDR (Lon)7818.70%10.57n/aSMSD
GazpromGDR (Lon)12123.30%522n/aOGZD
PetrochinaADR18220%13.510.613.8PTC
PetrobrasADR158100%9n/an/aPBR