BARCLAYS PRESENTS: The 39 Most Innovative Public Companies In America

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With U.S. corporates sitting on ever growing stockpiles of cash, companies have to find new businesses and projects to put capital to work.Barclays analyst Gavin Smith is out with a list on the 39 firms he believes can successfully innovate their way forward. 

Smith looked at five criteria when assembling the list: 

  1. Research and Development intensity average greater than 1 per cent over past five years (intensity is defined as R&D divided by sales)
  2. Proven record of turning innovation into profitability
  3. Net Debt over EBITDA under 3x to limit funding constraints
  4. Premium of price-to-earnings ratio below 50 per cent to limit overpaying for an equity
  5. Market cap over $1 billion

Barclays focused on firms with low debt financing because R&D projects are often hit-or-miss. High debt financing requires a firm to generate stable profits to pay off interest expenses — something R&D projects cannot always guarantee.

Two industries clearly dominate Smith’s list: technology and healthcare firms.

“We believe this screen is particularly relevant given the high levels of cash on firms’ balance sheets,” Smith says. “The screen is a good starting point for understanding which firms have success at deploying cash on innovative projects.”

Netflix Inc.

Ticker: NFLX

R&D Intensity: 7 per cent

Net Debt/EBITDA: -0.9

Barclays Performance Score: 2.5

Company Description: Netflix offers DVD and Blu-ray rental by mail, as well as video streaming in the US. It is headquartered in Los Gatos, California.

Source: Barclays

WMS Industries Inc.

Ticker: WMS

R&D Intensity: 13 per cent

Net Debt/EBITDA: -0.2

Barclays Performance Score: 2.2

Company Description: WMS manufactures and distributes games to the gambling industry.

Source: Barclays

General Mills Inc.

Ticker: GIS

R&D Intensity: 2 per cent

Net Debt/EBITDA: 2.3

Barclays Performance Score: 2.0

Company Description: General Mills sells consumer food products including cereal, snacks, vegetables, and yogurt.

Source: Barclays

Abbott Laboratories

Ticker: ABT

R&D Intensity: 10 per cent

Net Debt/EBITDA: 0.8

Barclays Performance Score: 2.2

Company Description: Abbott is a major pharmaceutical and medical devices company, with offerings in a variety of markets including arthritis and cholesterol.

Source: Barclays

Becton Dickinson and Co.

Ticker: BDX

R&D Intensity: 6 per cent

Net Debt/EBITDA: 0.7

Barclays Performance Score: 2.0

Company Description: Becton Dickinson manufactures and sells medical devices.

Source: Barclays

Gilead Sciences Inc.

Ticker: GILD

R&D Intensity: 14 per cent

Net Debt/EBITDA: -0.6

Barclays Performance Score: 2.6

Company Description: Gilead is a leading biotechnology firm with drugs in the HIV/AIDS, liver disease and hepatitis markets.

Source: Barclays

Hologic Inc

Ticker: HOLX

R&D Intensity: 6 per cent

Net Debt/EBITDA: 1.2

Barclays Performance Score: 2.0

Company Description: Hologic manufactures surgical equipment and other products for the breast health, diagnostics, and skeletal health markets.

Source: Barclays

Illumina Inc.

Ticker: ILMN

R&D Intensity: 19 per cent

Net Debt/EBITDA: -1.2

Barclays Performance Score: 2.3

Company Description: Illumina manufactures tools to analyse genetic variation.

Source: Barclays

Intuitive Surgical Inc.

Ticker: ISRG

R&D Intensity: 8 per cent

Net Debt/EBITDA: -1.4

Barclays Performance Score: 2.6

Company Description: Intuitive manufactures the da Vinci Surgical Systems which uses precision incisions and a better range of motion.

Source: Barclays

Life Technologies Corp.

Ticker: LIFE

R&D Intensity: 10 per cent

Net Debt/EBITDA: 1.5

Barclays Performance Score: 2.1

Company Description: Life is involved in genomics research and proteomics and cell biology applications.

Source: Barclays

Medtronic Inc.

Ticker: MDT

R&D Intensity: 9 per cent

Net Debt/EBITDA: 1.3

Barclays Performance Score: 2.1

Company Description: Medtronic markets and manufactures medical devices for diabetes and heart disease, among other conditions.

Source: Barclays

Qiagen NV

Ticker: QGEN

R&D Intensity: 11 per cent

Net Debt/EBITDA: 0.0

Barclays Performance Score: 2.0

Company Description: Qiagen is involved in reanalytical sample preparation and linked molecular assay solutions.

Source: Barclays

Quality Systems Inc.

Ticker: QSII

R&D Intensity: 6 per cent

Net Debt/EBITDA: -0.9

Barclays Performance Score: 2.6

Company Description: Quality Systems markets healthcare IT systems.

Source: Barclays

ResMed Inc.

Ticker: RMD

R&D Intensity: 7 per cent

Net Debt/EBITDA: -1.5

Barclays Performance Score: 2.1

Company Description: ResMed manufactures and develops sleep-disorder treatments and products.

Source: Barclays

St Jude Medical

Ticker: STJ

R&D Intensity: 12 per cent

Net Debt/EBITDA: 1.1

Barclays Performance Score: 2.2

Company Description: St Jude manufactures cardiovascular and neurostimulation medical devices.

Source: Barclays

Techne Corp.

Ticker: TECH

R&D Intensity: 9 per cent

Net Debt/EBITDA: -0.8

Barclays Performance Score: 2.1

Company Description: Techne manufactures and sells biotechnology products and hematology controls.

Source: Barclays

Varian Medical Systems

Ticker: VAR

R&D Intensity: 7 per cent

Net Debt/EBITDA: -0.7

Barclays Performance Score: 2.2

Company Description: Varian manufactures cancer treatment technologies, including radiotherapy.

Source: Barclays

West Pharmaceutical Services Inc

Ticker: WST

R&D Intensity: 2 per cent

Net Debt/EBITDA: 1.3

Barclays Performance Score: 1.6

Company Description: West develops packaging and systems for injectable drugs, including the caps and sealants used on vials.

Source: Barclays

Emerson Electric Co

Ticker: EMR

R&D Intensity: 2 per cent

Net Debt/EBITDA: 0.7

Barclays Performance Score: 2.1

Company Description: Emerson designs and markets IT systems and offers engineering services to clients in the industrial world.

Source: Barclays

HEICO Corp.

Ticker: HEI

R&D Intensity: 3 per cent

Net Debt/EBITDA: 1.0

Barclays Performance Score: 2.2

Company Description: HEICO manufactures FAA approved replacement aircraft parts.

Source: Barclays

Lincoln Electric Holdings

Ticker: LECO

R&D Intensity: 1 per cent

Net Debt/EBITDA: -0.7

Barclays Performance Score: 1.9

Company Description: Lincoln manufactures welding products.

Source: Barclays

Triumph Group

Ticker: TGI

R&D Intensity: 1 per cent

Net Debt/EBITDA: 2.2

Barclays Performance Score: 2.1

Company Description: Triumph designs and manufactures aerostructures and aircraft components.

Source: Barclays

Woodward Inc.

Ticker: WWD

R&D Intensity: 6 per cent

Net Debt/EBITDA: 1.3

Barclays Performance Score: 2.3

Company Description: Woodward manufactures energy and fluid movement systems.

Source: Barclays

Apple Inc.

Ticker: AAPL

R&D Intensity: 3 per cent

Net Debt/EBITDA: -2.1

Barclays Performance Score: 2.8

Company Description: Apple designs, manufactures and sells consumer electronic goods, including desktop computers, laptops, mobile phones and tablets.

Source: Barclays

ADTRAN Inc.

Ticker: ADTN

R&D Intensity: 16 per cent

Net Debt/EBITDA: -0.8

Barclays Performance Score: 2.2

Company Description: Adtran provides networking and communication equipment for the last mile of the telecommunication network.

Source: Barclays

Advent Software Inc.

Ticker: ADVS

R&D Intensity: 18 per cent

Net Debt/EBITDA: -1.3

Barclays Performance Score: 1.7

Company Description: Advent markets software that automates data movement between investment management firms.

Source: Barclays

Broadcom Corp

Ticker: BRCM

R&D Intensity: 31 per cent

Net Debt/EBITDA: -3.2

Barclays Performance Score: 1.9

Company Description: Broadcom manufactures chips for both wireless and wired devices.

Source: Barclays

Cree Inc.

Ticker: CREE

R&D Intensity: 12 per cent

Net Debt/EBITDA: -3.5

Barclays Performance Score: 1.7

Company Description: Cree manufactures light emitting diode screens and products.

Source: Barclays

Cisco Systems

Ticker: CSCO

R&D Intensity: 13 per cent

Net Debt/EBITDA: -2.5

Barclays Performance Score: 2.2

Company Description: Cisco sells Internet protocol communication equipment and networking devices.

Source: Barclays

Dolby Laboratories

Ticker: DLB

R&D Intensity: 10 per cent

Net Debt/EBITDA: -2.2

Barclays Performance Score: 2.6

Company Description: Dolby sells audio equipment to movie theatres and production crews.

Source: Barclays

FLIR Systems

Ticker: FLIR

R&D Intensity: 9 per cent

Net Debt/EBITDA: -0.5

Barclays Performance Score: 2.6

Company Description: FLIR manufactures sensors for a variety of industries, including digital cameras and imaging.

Source: Barclays

Google Inc.

Ticker: GOOG

R&D Intensity: 13 per cent

Net Debt/EBITDA: -3.0

Barclays Performance Score: 2.7

Company Description: Google Inc. is an Internet search technology corporation. Google hosts and develops dozens of products, but generates profits primarily through search advertising.

Source: Barclays

NetApp Inc.

Ticker: NTAP

R&D Intensity: 14 per cent

Net Debt/EBITDA: -3.7

Barclays Performance Score: 2.1

Company Description: NetApp offers network storage and data management, with headquarters in Sunnyvale, CA.

Source: Barclays

Nuance Communications

Ticker: NUAN

R&D Intensity: 13 per cent

Net Debt/EBITDA: 1.8

Barclays Performance Score: 1.8

Company Description: Nuance provides speech, imaging and keypad solutions.

Source: Barclays

Oracle Corp.

Ticker: ORCL

R&D Intensity: 12 per cent

Net Debt/EBITDA: -0.9

Barclays Performance Score: 2.7

Company Description: Oracle Corporation is a technology corporation specializing in enterprise software products.

Source: Barclays

Synaptics Inc

Ticker: SYNA

R&D Intensity: 15 per cent

Net Debt/EBITDA: -3.5

Barclays Performance Score: 2.4

Company Description: Synaptics designs user interfaces for electronic devices and is a co-engineering partner on Windows 8.

Source: Barclays

TriQuint Semiconductor Inc.

Ticker: TQNT

R&D Intensity: 16 per cent

Net Debt/EBITDA: -1.1

Barclays Performance Score: 1.8

Company Description: TriQuint produces radio frequency solutions for communication applications.

Source: Barclays

VistaPrint NV

Ticker: VPRT

R&D Intensity: 11 per cent

Net Debt/EBITDA: 0.6

Barclays Performance Score: 2.4

Company Description: VistaPrint sells printing services to small businesses.

Source: Barclays

Monsanto Co.

Ticker: MON

R&D Intensity: 11 per cent

Net Debt/EBITDA: -0.4

Barclays Performance Score: 2.3

Company Description: Monsanto markets and manufactures agriculture products to farmers.

Source: Barclays

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