10 Interesting Stocks With The Best Global Brand Names

Coca-Cola reported strong third-quarter results that showed solid revenue expansion, volume growth, and market share gains. Overall, we liked the performance in the quarter and are maintaining our $67 fair value estimate.

The acquisition of its bottler group

Thanks primarily to the acquisition of its bottler group, net revenue advanced about 45% from the prior-year quarter. Although the year-over-year comparisons weren’t apples-to-apples, international volume growth was supurb, advancing 5% while the period – brand Coca-Cola led the charge outside of the US. Sparkling beverage volume grew 17% in India, 11% in Argentina, 7% in China and 6% in both Mexico and France. However even North America saw decent expansion, with organic volume growth of 1% in the period.

Despite the decent revenue performance, we note that there was a 5% currency benefit in the period, which interestingly matched worldwide volume growth in the period. That is, should currency move against Coca-Cola in future periods, we could see a slight top-line miss in the current quarter, particularly in a scenario where volume slows from its current strong trajectory. That said, Coca-Cola possesses significant pricing power and can adjust according, particularly in North America, to mitigate any serious revenue shortfalls. For instance, the company achieved 2% positive pricing to retailers in its third-quarter.

IBM’s revenue nudged up 3% thanks to growth in cloud-revenue, software, and in regions it considers to be growth markets. Software revenue was aided by strength in the firm’s middleware products—WebSphere, Information Management, and Tivoli.

Sales in BRIC countries—Brazil, Russia, India, China—increased 13%, matching aggregrate growth-market expansion. Services revenue, adjusted for currency, nudged higher 2%, and backlog related to the segment improved $2.4 billion, to $137 billion. Although services backlog declined sequentially, we think year-over-year performance is a better assessment of the underlying growth of the business. On a geographic basis, strength was hit-or-miss, with revenue—adjusted for currency—increasing 6% in the Americas, however staying approximately flat in Europe/Middle East/Africa and in the Asia-Pacific.

Microsoft reported in-line fiscal first-quarter results. We are maintaining our mid-$30s fair value estimate and think the firm would be a nice addition to our Best Ideas portfolio upon technical improvement. We're as well not hurting for additional innovation exposure, as we already hold eBay, Intel, and Apple.

The software giant’s revenue advanced 7% in its fiscal first quarter, during net income and diluted revenues per share jumped 6% and 10%, respectively. All major reporting segments—Windows, Server and Tools, Online Services, Microsoft Business, Entertainment and Devices—experienced top-line expansion, although only its Server and Tools, Microsoft Business, and Online Services divisions showed improvement in operating income, and its Online Services business remains in the red.

We think the Server and Tools segment will benefit from "Windows Server 8" in coming periods, during we expect continued growth in its Microsoft Business division from Lync, Sharepoint, and Exchange—which all grew double-digits in the third quarter. As for Windows, momentum slowed in the quarter with Windows 7, and the firm is looking forward to launching the at once upgrade, "Windows 8," which it unveiled at the recent BUILD conference. But, much of Windows’ growth will be dependent on underlying growth in personal computers, which are competing structurally with mobile and tablets. Bing continues to grow market share in the US, the Xbox remains the top-selling gaming console in the US, and the firm completed its acquisition of Skype.

All in all, it was business as usual at Microsoft, and the firm seemed quite enthusiastic about the holiday season: "With a great set of consumer products like Windows 7 PCs, Windows Phone 7.5, Xbox and Kinect, we are excited about the holiday buying season." We’re growing much more interested in Microsoft given its recent dividend increase--the firm now boasts near a 3% yield.

Revenue growth accelerated to a whopping 33% thanks to near a 40% increase in Sites revenue, which represents 69% of the business. Network revenue – or revenue generated by Google’s partner sites – jumped 18% and represented in broad outline 27% of consolidated revenue in the quarter. Aggregate paid clicks increased 28% over the third quarter of 2010 and 13% sequentially – solid performance. We were as well pleased with the firm’s mobile business, which now powers approximately 190 million devices.

The performance of Google+ in the quarter

We were as well very impressed with the performance of Google+ in the quarter, and, for the first time ever in our recollection, we saw an exclamation point in a company’s revenues release. Like as not needless to reiterate, management is in the extreme optimistic about the new social-networking endeavor:

Google’s non-GAAP operating income advanced 24%, during non-GAAP net income jumped over 29% while the period. Non-GAAP EPS rose near 28%, to $9.72 from $7.64 in the prior-year quarter. The bottom line blew by consensus estimates, and we expect the Street to continue to migrate up to our long-term forecasts. Google continues to pull in cash at a rapid rate, with net cash from operating activities jumping near 37% in the period, to almost $4 billion. Free cash flow conversion was fantastic as so then, with the company raking in near $3.3 billion, or in broad outline 34% of earnings in the quarter – among the best in our coverage universe.

Earnings per share surged 12% to $1.45, which blew past every estimate on the street. Margins came in higher than expected, as commodity prices fell off a cliff while the quarter, and incremental revenue gains were much higher than expected. But, with the company hedged, they were unable to experience the full extent of these cost savings.

The first sentence of Intel’s press release tells most of the story behind the quarter: "Intel…reported third-quarter results, setting new records for microprocessor units shipped, EPS, revenues and revenue, which was up 28 percent year-over-year." As a matter of fact, it’s difficult to find much not to like in chip giant’s performance while the period. As mentioned above, revenue hit $14.2 billion, operating income hit $4.8 billion, net income reached $3.5 billion, and revenues per share hit $0.65.

Interestingly and maybe surprisingly to onlookers, the chip maker indicated that it saw double-digit growth in notebook personal computers. Such performance was not expected broadly by the Street and reinforces our thesis that the PC is not dead. Intel as well noted strength in its data center group, which advanced 15% in the period, thanks to the proliferation of mobile and cloud computing.

Aside from posting impressive numbers, and retaining its relatively bullish outlook on global PC sales, Intel provided some information on their 3-D processors that will ship in spring 2012, and the strength of the McAfee integration. In our last note to investors, we argued that adding the security company’s revenue mix would be accretive to revenues and ultimately gross margins, which appears to be the case.

The remainder of the year

Intel’s outlook for the remainder of the year was such as strong as its most recently reported results, guiding this quarter’s revenue to $14.7 billion, which beat most analysts’ expectations. Overall, we think the firm remains significantly undervalued at today’s prices, and we think the large buyback and dividend will only help Intel outperform the broader market.

Perhaps the most valuable thing investors can learn is that stock prices are determined by future expectations of a firm's business fundamentals, and by extension, its future free cash flow stream. The uncertainty of the future--and not the certainty of the past--is what drives stock prices and their volatility.

This consideration is important as we evaluate Apple's fiscal fourth-quarter results, which came in lighter than what the Street had been expecting. In spite of the miss, the iPhone-maker guided its fiscal first-quarter above consensus estimates, which should and always will trump any revenues miss as interpreted by the market in the previous quarter. Importantly, the last quarter is now behind us, and all that matters is what's ahead hereafter for Apple. And, in Apple's case, the future is bright. We're maintaining our $531 fair value estimate.

The iPhone-maker posted quarterly revenue of $28

The iPhone-maker posted quarterly revenue of $28.3 billion and quarterly net profit of $6.6 billion, or $7.05 per diluted share. Compared with last year's quarter, these numbers represent significant growth in the firm's top and bottom line. While the period, Apple sold over 17 million iPhones, 11.12 million iPads, and 4.89 million Macs. Much of the disappointment in Apple's performance was due to a shortfall in iPhone sales which caused in broad outline a $0.25 bottom-line miss--the Street had been expecting several million more iPhones in terms of unit sales. Nevertheless, the leak of the launch of the features behind the iPhone 4S ultimately swayed consumers to wait for the upgraded phone. And with Apple selling over 4 million units of the iPhone 4S in a three-to-four day period afterwards the closing of the recently reported quarter, we're far from concerned about any slowdown in this key profit driver.

Apple's cash flow generation continues to be robust, and the firm now holds more than $81 billion in cash on its balance sheet. As mentioned above, Apple's guidance for the first quarter of fiscal 2012 as well came in better than expectations, with revenue anticipated at $37 billion and diluted revenues per share of about $9.30. We fully expect Apple to deliver on its guidance for at once quarter, however we are watching developments at smartphone makers powered by Google's Android, as then as developments in the tablet market, which will witness the release of Amazon's new Kindle Fire in mid-November.

Walt Disney reported decent fiscal third-quarter results Tuesday that showed revenue growth of 9% and solid net-income expansion of 11%. We like the strong brands at Disney and would consider adding it to our Best Ideas portfolio in accordance with $28 per share on the basis of our discounted cash-flow process.

The firm experienced solid sales growth from is Parks

The firm experienced solid sales growth from is Parks and Resorts—Disney Cruise Line and Hong Kong Disneyland Resort--and Consumer Products—Merchandising Licensing--segments. These two segments as well led the charge with respect to operating income expansion, with Media Networks as well posting nice double-digit growth thanks to strong performance from cable networks and broadcasting. As it relates to the health of the consumer, the firm noted that it experienced higher guest spending and attendance at its domestic parks and resorts–-a source of strength and an interesting, positive data point regarding the US economy. Lagging performance was evident in the firm’s Studio Entertainment segment, where sales were flat nevertheless operating income fell by more than half. The company blamed restructuring and impairment charges and the results of Cars 2 and Thor in the current quarter versus Toy Story 3 and Iron Man 2 in last year’s quarter for the underperformance in the segment. Interactive Media, during showing strong top-line expansion, as well fell meaningfully on the operating line. Cash from operations remained strong in the period, yet free cash flow has faced some pressure so far this year due to purchases related to its new cruise ship, the Disney Dream, and domestic park and resort expansions.