Everybody is looking for the next Apple Inc. — at least they should be — as companies with 10% surplus free cash flow yields are hard to come by.
Apple’s annual surplus FCF after capex and limited shareholder payouts equated to a remarkable 10% of its total market cap when the stock bottomed in mid-2013.
The combination of an inexpensive valuation and large cash position prompted activist investors to push Apple’s management for higher shareholder payouts. Its market cap has since risen some US$300-billion.
Citi Research’s global strategy team noted that only 16 companies in the world traded on a similar valuation as Apple did a year ago.
They searched the globe for companies trading on a 10% surplus yield and found only 11 names — nine of which are in Korea or Japan — that are also attracting interest from activist investors. The companies must also have…
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