Four Mega Companies for Investors

With news of GE's fourth quarter profit growth this morning -- which was highlighted in this morning's Morning Coffee with TradingMarkets -- investors should know that there is more than one stock in the Conglomerate industry group worth knowing about. This 10-rated industry has four stocks at the top that are more likely than the average stock to be higher one year from now.

As an industry with a PowerRating of 10, the Conglomerate industry is one of the best places where investors can look for stocks right now. Based on our research going back to 1995, industries with PowerRatings of 10 have provided average annualized returns of more than 35%. The average industry since 1995, by comparison, has produced average annualized returns of approximately 14.61%--a significant difference.

Each of the four stocks in today's discussion of conglomerates -- mega companies with a diverse set of businesses of usually industrial and commercial services gathered under one banner -- has a PowerRating of 8. When looking for stocks, one of the best combinations investors can spot involves companies with high PowerRatings of 8, 9 or 10 that also belong to industries with high PowerRatings, preferably of 7 or better. When it comes to these four conglomerates, both conditions are very much met.

As 8-rated stocks, these four companies -- Danaher (DHR@DHR | Quote | Chart | News | PowerRating), General Electric (GE@GE | Quote | Chart | News | PowerRating), 3M {MMM@MMM] and Thermo Fisher Scientific (TMO@TMO | Quote | Chart | News | PowerRating) -- all belong to that class of stock that is more reliable than the average stock. By "more reliable" I mean that these stocks have a better chance than the average stock of being higher one year from now. The average stock, according to our research, is higher one year later less than 68% of the time. Stocks with PowerRatings of 8, by comparison, have tended to be higher more than 74% of the time.

Stocks with PowerRatings of 8 also tend to outperform the average stock. 8-rated stocks have averaged gains of more than 17% in a year's time. The average stock, on the other hand, has averaged returns of 12-13% after one year. Advantage: high PowerRating stocks.

Danaher is the first stock on our list of high PowerRating conglomerates. Danaher is based out of Washington, D.C. and designs, makes and markets industrial, medical and consumer products in four different business divisions: professional instrumentation, medical technologies, industrial technologies and tools and components.

The company trades at a P/E of 18.30, and is trading in the middle of its 52-week price range from $89.22 to $69.11.

I mentioned General Electric and its positive earnings announcement this morning. General Electric, of course is a large and well-known conglomerate with businesses interest ranging from industrial production to financial services. General Electric trades at about 15.30 times earnings and is in the middle of its fairly-wide 52-week price range from $50.02 to $10.05.

Maker of Post-it notes among a number of other widely used products, 3M is a global, diversified industrial and technology company that does business in a wide variety of fields from industrial and transportation, health care, graphics, consumer and office products and communications. 3M is trading a few dollars off its 52-week low of $72.90. The stock has a P/.E ratio of 12.50.

Our high PowerRating conglomerate is one that is likely less well-known than GE, 3M or even Danaher. Thermo Fisher Scientific makes a variety of analytic instruments, software, reagents and equipment for use in research, manufacturing and diagnostics markets in industry and healthcare. The stock has a P/E ratio of 47.60, and is trading in the middle of its 52-week price range from $62.02 to $43.60.

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