Technology dominates our daily lives, rules the current stock market and commands — for now at least — the esteem of America’s professional investors.

Four of the five most respected publicly traded companies in the United States are West Coast technology disrupters, with Berkshire Hathaway — a predominantly old-economy conglomerate — as the lone non-technology firm among the leaders, according to Barron’s 2017 ranking of 100 US-based companies based on a survey of money managers.

No 1 is Alphabet, parent of Google, the search-engine behemoth that dominates global advertising. Serial inventor Apple, is No 2, followed by online retail giant Amazon.com (its CEO Jeffrey P. Bezos owns The Washington Post) at No 3.

Warren Buffett’s Berkshire Hathaway is No 4. No 5 is Microsoft, the tech grand-daddy whose stock has soared under the leadership of chief executive Satya Nadella after sputtering for more than a decade.

Why the love for technology? Pretty simple, says David Kass, finance professor at the University of Maryland. “That is where there is growth,” he said, “in the economy, in earnings per share, in revenue.”

“The economy by contrast is only growing at 2pc, but these companies are outpacing virtually all other industries in revenue and profit growth, and share price is following along.”

Look at the share prices: Alphabet is up 36pc in the past 12 months and 27pc so far in 2017 — with its share price surging above $1,000 last Monday. The Standard & Poor’s 500-stock index, which reflects the performance of the 500 largest US public companies, is up 17pc over the past 12 months and 7pc this year.

Apple is up 57pc the last year and 33pc year to date.

Amazon — whose stock passed $1,000 a share recently — is swimming in the same pools. Its share price has increased 39pc in the past 12 months and 35pc so far this year.

“The economy by contrast is only growing at 2pc,” Kass said, “but these companies are outpacing virtually all other industries in revenue and profit growth, and share price is following along.”

The Barron’s survey is not scientific and has no bearing on the companies. The weekly financial magazine says it polled America’s money managers over six weeks to gauge their attitudes on the 100 largest publicly held companies in the S&P 500 index.

The participants were asked to select one statement reflecting their opinion: highly respect, respect, respect somewhat and don’t respect.

In addition to technology, the money managers like shopping (Costco Wholesale, No. 6), home repairs (Home Depot, 8; Lowe’s, 14) and entertainment (Walt Disney, 10; Netflix, 15).

Dropping from the top spot to No 7 was health-care giant Johnson & Johnson, which often graces ‘best of’ lists when it comes to management. Johnson & Johnson is one of only two Triple-A-rated companies left in the United States. The other blue-chip blessed with the rarified Triple-A rating - which primarily measures the quality of a firm’s bonds - is Microsoft.

Oil giant Exxon, which dropped from 29 to 41, and lost its membership in the exclusive AAA club a year ago after Standard and Poor’s downgraded its rating in the wake of tumbling oil prices.

This is the first year that Barron’s has included only US companies in its list.

“While the survey doesn’t address stock-price performance, many highly respected companies trade at a lofty premium,” according to Barron’s.

And some don’t. General Electric, the 125-year-old conglomerate, dropped from 39 to 68 as it has seen its stock price languish. Coca-Cola dropped from 34 to 66 as the Atlanta beverage giant continues to diversify beyond its carbonated-based core business. Meanwhile, rival PepiCo rose to 23 from 28 last year, mostly on the back of its robust Frito-Lay profits.

Some familiar names may have been hurt by scandal.

General Motors, which has weathered a costly ignition-switch scandal, ranked 88 of 100. The flaw killed at least 124 people and injured another 275 in small cars made by the old, pre-bankruptcy GM, such as the Chevrolet Cobalt and Saturn Ion.

One rank below it, at 89, is Twenty-First Century Fox, parent of Fox News. The company has incurred tens of millions in costs related to potential litigation and settlements in the aftermath of sexual harassment allegations against top-rated news personality Bill O’Reilly, who was ousted in April, and the late Roger Ailes, the disgraced chairman of Fox News who left last summer.

The biggest loser this year is Wells Fargo, the San Francisco financial giant who held the No. 7 spot as recently as 2015 but this year turned up dead last.

Buffett, whose Berkshire Hathaway owns $25 billion of Wells Fargo shares, at his annual meeting last month rebuked the bank’s handling of widespread illegal sales practices that spanned at least 15 years and included targeting undocumented immigrants to open new bank accounts.

Buffett said the San Francisco banking giant’s executives failed to act immediately after finding out that employees were creating countless fake and fraudulent bank accounts to meet the company’s unrealistic sales goals. Wells Fargo “incentivised the wrong type of behaviour,” the 86-year-old billionaire said.

Wells Fargo spokeswoman Jennifer Dunn said “our top priority is to rebuild trust in our company, and we have taken decisive actions to fix the problems, make things right for customers, and build a better Wells Fargo.

“Our actions include eliminating product sales goals for retail bank team members, emphasising customer experience, and strengthening ethics and risk management throughout the company.”

Wells Fargo’s score was so low that the company displaced tobacco giants Altria Group and Philip Morris International, who keep pounding out profits even as states and municipalities pile on tobacco taxes.

The image of tobacco companies making products that are dangerous to people’s health may actually have created opportunities for investors willing to trade in the shares.

“In the recent years, tobacco stocks have actually outperformed the S&P 500 because many investors avoid them,” Kass said.

“Some mutual funds perhaps are prohibited from investing in them. It creates a reduction in demand and lower share price. That in turn is an opportunity for investors to actually do reasonably well.”

The Washington Post Service

Published in Dawn, The Business and Finance Weekly, June 12th, 2017