Big pharma dominates ranking of stocks with best five-year returns

NEW YORK (Reuters) - U.S. pharmaceutical companies dominated an annual global ranking of top 10 large-cap stocks with the best five-year returns, according to an analysis released on Tuesday by Boston Consulting Group.

Traders work at the post where Allergan stock is traded on the floor of the New York Stock Exchange (NYSE) April 6, 2016. REUTERS/Brendan McDermid

Drug company Regeneron Pharmaceuticals REGN.O, which had an average annual total share return of 75.3 percent, was the top performer. Allergan AGN.N and Gilead Sciences GILD.O, with 43.3 percent and 41.4 percent average annual returns, respectively, took second and third place.

Companies with over $4 billion in market cap were considered for the list and ranked based on share gains and dividend yields between 2011 and 2015. Some 2,000 stocks were analyzed.

Big pharma had a total of four companies make the list. The fourth, Biogen BIIB.O, landed in the No. 6 spot.

Seven of the top 10 stocks ranked highest for creating value for shareholders were U.S. companies.

Several technology and media companies, including South Africa's Naspers NPNJn.J, China's Tencent 0700.HK and U.S.-based Netflix NFLX.O, also made the list.

Besides pharma, industries that delivered the highest shareholder returns over the past five years include healthcare services, followed by media and publishing and travel and tourism. Commodity industries - oil, metals and mining - rank at the bottom of the list, BCG’s report said.

Investors appear to be cashing in on some gains, with the S&P 500 Health Care Sector .SPXHC down 2.7 percent year-to-date.

Since Boston Consulting began publishing its analysis of top value-creating stocks in 1999, 89 companies have made the list -with fewer than half doing so a second time, the report said.

Only 19 companies have appeared on the list three years or more, including Apple Inc AAPL.O, AMZN.O, Ambev SA ABEV3.SA China's Baidu Inc BIDU.O and Tencent, a Chinese social media company.

Regeneron, Netflix, Visa V.N, Japan's communications provider KDDI 9433.T and MasterCard MA.N, with a 34.7 percent average annual return, appeared on the top 10 for the first time.

“We’re always quite surprised at how much change there is one year to another,” said Hady Farag, a New York-based principal at BCG who co-authored the report.

While pharmaceutical companies have ranked high in recent years, individual companies with sustainable revenue growth and strong business plans, rather than those “riding industry trends,” have consistently done well, Farag said.

Reporting by Laila Kearney; Editing by Nick Zieminski