YOUTH WILL BE SERVED

Companies that aren’t even 23 years old are among the most respected by Wall Street

Wall Street has a lot of problems, but sentimentality isn’t one of them. Investors are happy to trade in old favorites for upstarts if it helps them make a buck, and stocks that once powered portfolios are quickly discarded at the first sign of weakness.

Two companies yet to celebrate their 23rd birthdays—Alphabet, the parent of Google, and Amazon—are among the US companies most respected by investors, according to a survey of money managers (paywall) by Barron’s, a newspaper for investors. Alphabet, which dates to 1998, and Amazon (1994) are first and third in the rankings, respectively. Apple, still a relatively youthful company founded in 1976, was No. 2.

Alphabet and Amazon earned the investors’ faith through performance. Amazon shares have climbed 50,000% since its 1997 IPO, while Alphabet—fueled by the world’s most successful online advertising business—continues to deliver. Profits increased 29% in the first quarter, a huge increase for a company so large.

Rank Companies Investors who highly respect Investors who don’t respect
1 Alphabet 62% 0%
2 Apple 61 2
3 Amazon 59 2
4 Berkshire Hathaway 55 1
5 Microsoft 44 2

Barron’s asked 112 investors to grade the 100 largest US companies on how well respected they are. While the top five is dominated by technology companies, the bottom five consists of three tobacco companies, AIG insurance, and Wells Fargo, the scandal-plagued bank.

Rank Companies Investors who highly respect Investors who don’t respect
96 Reynolds American 4% 19%
97 AIG 4 19
98 Altria 6 32
99 Phillip Morris International 4 34
100 Wells Fargo 1 48

As a reward for their performance, both Alphabet and Amazon eclipsed the symbolic $1,000-per-share price in the last few days. A share price above $1,000 isn’t just a measure of the companies’ earnings and future growth potential, but also of their ambition. While companies would once routinely split their stock to lower their per-share price and attract smaller investors, Alphabet and Amazon can’t be bothered. Their shares are hoovered up by institutional investors unfazed by the price tag, and who make up the Barron’s voters.

Alphabet and Amazon don’t just provide services designed to please its users. Unlike some tech companies we can mention, they’ve also constructed durable businesses designed to please investors.

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