Norwegian offshore drilling contractor Seadrill tops a list compiled by Citi of "World Champion" stocks with the most potential to outperform in the near term.
"World Champions" are companies able to display clear signs of pricing power, enjoy strong balance sheets, are well managed and often have meaningful revenue exposure to faster-growing emerging economies, according to analysts at Citi.
"These are typical stock characteristics that have served investors well during previous lost decades around the world," analysts at Citi write in a note.
"Our European team notes that collectively the names in their World Champions basket have consistently outperformed over the past five years."
However, while the companies exhibit strong long term credentials, World Champion status does not take into account current valuation concerns. Indeed, of the list of 50 World Champions, 12 are currently rated at Neutral by Citi, and three at Sell, including Swedish industrial Atlas Copco (Other OTC: ATLCY - news) .
With current valuations as well as analysts ratings taken into account, Seadrill emerges as the top Buy rated World Champion, with a Estimated Total Return of 37.5 percent.
"Seadrill is active in all key deepwater drilling geographies (Brazil, West Africa, Gulf of Mexico) with 88 percent of its drilling assets operating outside of its home Norwegian market," Ryan Kauppila, analyst at Citi, writes in a note.
"Activity is concentrated amongst the large oil majors... and Seadrill is well positioned in a post-Macondo environment of heightened risk aversion, in our view."
Also among the top 25 stocks are Belgian beverage firm AB-InBev, British American Tobacco (LSE: BATS.L - news) , Danish pharamceuticals group Novo Nordisk (Other OTC: NONOF - news) and British chip manufacturer ARM.
Reuters messaging rm://alistair.smout.thomsonreuters.com@reuters.net
