Image: Exxon
AP
Exxon is the world largest oil company, and in a good quarter can mark over $10 billion in net income.
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updated 8/15/2011 7:31:09 AM ET 2011-08-15T11:31:09

Apple became the most valuable company in America on Wednesday when its market cap passed Exxon Mobil’s at the end of the trading day. But by the end of the week, the oil giant was back on top.

The move draws attention to what market cap means, and why it is important. The total value of a company is simply a factor of the market forces that fight over what value to put on a company’s assets, earnings, and future business prospects. The market cap of each company is skewed by how quickly the stock trades and within what range. One of the companies on this list could pass another in a single day, if a stock moves enough. The list, therefore, is hardly permanent

24/7 Wall St. assembled a list of the ten most valuable companies in the US and asked the question of why they are on the list, and whether their overall direction is up or down.

10. Johnson & Johnson
Market cap:
173.7 billion
Current stock price: $63.36
52-week high/low: $57/$68
Industry: Consumer products

J&J is in a wide range of businesses related to consumer healthcare products and medical devices. Among its most widely sold treatments are OTC drugs which include Tylenol. J&J also makes expensive surgical instruments and equipment for the treatment of coronary artery disease. The company has been plagued by a series of recalls of its OTC products. In general, with the rising costs of healthcare, J&J is in strong position for the stock to rally over the next few years. Shares may trade low until J&J solves its recall problems.

9. Wal-Mart
Market cap:
$172.8 bilion
Current stock price: $49.75
52-week high/low: $58/$49
Industry: retail

The world’s largest retailer has sales of $415 billion, and is the biggest single employer in the U.S. Wal-Mart has struggled mightily with stalled sales in the US where it competes with Target, Costco, and Sears. Its overseas sales have been up sharply, mostly because of success in China and Mexico. Wal-Mart faces some cost pressures. Among these is the possibility that the firm will be unionized in the U.S. The stock trades in a 52-week price range of $58 and $49. It trades at $50 on worries about a recession — one that could kill retail demand — and its struggles in the U.S. The trend of the stock will stay down if same-store sales in America do not improve

8. Procter & Gamble
Market cap:
$171.2 billion
Current stock price: $61.14
52-week high/low: $68/$58
Industry: consumer products

P&G is the world’s largest consumer product companies and does business in over 100 nations. Its broad array of products ranges from razors to soap to skin care. The firm’s margins have been challenged with the rise of certain commodities prices, but management claims that most of this can be offset by increases in what it charge for its products. The prices of most commodities have leveled off in the last two months. P&G has a number of small competitors like Colgate, but not have been able to take meaningful share form the market leader. P&G trades in a 52-week price range of $68 to $57. It changes hands at $59 and will probably remain at that low level until it is clear that the consumer economy has recovered.

7. Berkshire Hathaway
Market cap:
$178.06 billion
Current stock price: $71.52
52-week high/low: $88/$67
Industry: conglomerate

Warren Buffett’s conglomerate owns everything from railroads to newspapers to insurance companies. Part of the firm’s appeal to Wall Street is the fact that Buffett’s investing track record over the last 30 years is unequaled. Buffett tends to be a long-term investor and has held positions in corporations like Coca Cola for years. One of the major concerns about the company is that Buffett is 80 years old. The day he leaves, the shares are likely to tumble. The stock trades in 52-week range of $87 to $66. Shares are now at $68 on concerns that Buffett’s wide range of companies has exposure across the entire economy and his insurance companies have investments in derivatives.

6. Google
Market cap:
$182 billion
Current stock price: $563.77
52-week high/low: $642/$447
Industry: Internet

Google’s shares have been helped this year by a surge in sales and profits. The company still dominates the search engine market and has nearly three quarters of this business in the U.S. and most of Europe. Its position in big nations like China, India, and Russia is weaker. The market’s main complaint about Google is that it has continued to make huge investments in personnel and products which are not profitable. The stock’s 52-week price range is $642 and $447. It trades at $560 now and profit momentum should move that number up.

5. Chevron
Market cap:
$187.08 billion
Current stock price: $95.86
52-week high/low: $109/$72
Industry: oil

Chevron is essentially a smaller version of Exxon with both large exploration and refining operations. Investors have largely applauded the company’s move into the natural gas business. Current concerns around the company are that the International Energy Agency has recently said oil demand will be down over the next year. That means money for exploration may not enjoy a rapid return in price. Chevron made $11 billion last quarter and has a huge cash balance. Its 52-week price range is $109 to $72. It trades at $91 and the momentum is likely to drop with oil prices.

4. IBM
Market cap:
$203.76 billion
Current stock price: $168.20
52-week high/low: $185/$122
Industry: technology

IBM is to enterprise computing what Microsoft is to software products for individuals. IBM has diversified out of its traditional hardware into services, software, and financing of customer purchases. IBM has also been able to slash its employee base and export jobs to places like India and China. Solid product management has allowed the company to push past traditional rival like HP. The stock has a 52-week price range of $185 to $122 and trades at $167 now. The firm’s recent improvement in earnings means that the price momentum on the shares is up.

3. Microsoft
Market cap:
$214.32 billion
Current stock price: $25.10
52-week high/low: $29.50/$23.30
Industry: software

Microsoft was the No.1 company by market cap a decade ago. The stock has been frozen at 2001 levels for 10 years. The market’s trouble with Microsoft is that it has diversified into non-core business, including game console and search. Meanwhile, the company’s core software businesses are under assault by cloud computer businesses made by companies like Google. The stock’s 52- week price range is $29.50 to $23.30. Shares trade at 24.55 now. If the last decade is any indication, Microsoft’s market cap is likely to stay where it is.

(Microsoft is a joint-venture of Microsoft and NBC Universal.)

2. Apple
Market cap:
$346.74 billion
Current stock price: $376.91
52-week high/low: $404/$235
Industry: consumer electronics

As its stock has moved up 125 percent over two years, Apple has leapt over the other companies on the top 10 list. Apple’s strength as far as the market is concerned is that its sales nearly double in some quarters. Revenue is up to $100 million and profits are over $11 billion a quarter, which matches Exxon. Apple’s product introduction cycle and the high regard analysts have for the company makes it likely shares will rise sharply over the next year. The stock has traded in a 52-week price range of $404 and $235. It currently trades at $368.

1. Exxon Mobil
Market cap:
$348.32 billion
Current stock price: $72
52-week high/low: $88/$58
Industry: oil

Exxon is the world largest oil company, and in a good quarter can mark over $10 billion in net income. Its move rise and fall in market cap value is to some extent tied to the price of oil. The stock trades at $70 on a 52-week price range of $88 to $58. Its movement in the next few months is likely to be down as crude presses lower.

Copyright © 2012 24/7 Wall St. Republished with permission.

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