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How Rising Gas Prices Will Affect the 15 Biggest U.S. Companies

Thankfully, the largest stocks are largely insulated

By Jeff Reeves, Executive Editor of InvestorPlace.com

http://invstplc.com/1nvkz38

High gas prices are all over the news as crude oil continues to creep higher. Thanks to saber rattling over Iran, crude oil prices are above $100 and looking to march upward. The prospect of $5 gasoline prices is not outside the realm of possibility, and businesses and consumers alike are tightening their belts.

Many studies say how expensive gas is like a tax on economic growth because it eats into margins for businesses and eats into the spending power of ordinary Americans. Particularly hard hit are smaller companies and lower-income Americans, who don’t have that much wiggle room in their budgets.

But how are the largest U.S. companies (measured by market capitalization) going to fare amid expensive gas? Let’s take a look at the top 15 publicly traded stocks to see:

#15: Coca-Cola

With a market cap of almost $160 billion, Coca-Cola (NYSE:KO) is a consumer powerhouse. It uses plenty of energy in its bottling plants, but since oil isn’t the source from its energy, it is fairly insulated. Thanks to a distribution network that relies on independent distributors — not Coke — to foot the bill of driving around town to restock fridges and stores, Coca-Cola shouldn’t see too much of an impact.

#14: Pfizer

Pfizer (NYSE:PFE)Worth more than $160 billion, drug giant Pfizer (NYSE:PFE) is one of the biggest corporations in America. But thankfully, it also is insulated from energy prices. The biggest expense is likely the gas cost as corporate drug reps drive all over creation to distribute free samples of Pfizer medicine to physicians, but this isn’t going to cripple the big pharma star. PFE isn’t sweating expensive gas.

#13: Wells Fargo

wells fargo wfc stock

Wells Fargo (NYSE:WFC) also is worth over $160, thanks in part to its buyout of Wachovia in the wake of the financial crisis. As a commercial bank, WFC has plenty of tough headlines to deal with — from foreclosure woes to stricter regulations — but gasoline prices aren’t on the radar. Wells Fargo doesn’t have to worry about expensive gas.

#12: Johnson & Johnson

Johnson & Johnson (NYSE:JNJ)Johnson & Johnson (NYSE:JNJ) is worth almost $180 billion, measured by market capitalization. Same as Pfizer, Johnson & Johnson is a health care company that has very little exposure to volatility in the energy markets. And like Coca-Cola, JNJ has distributors bring its Band-Aids and Tylenols to shops nationwide without incurring fleet costs itself. That gives us yet another big-time corporation that has dodged the gasoline crunch.

#11: AT&T

AT&T TAT&T (NYSE:T) is worth more than $180 billion. The telecom giant has some limited exposure to gasoline prices, as it sends crews out to maintain its wireless network and landline communications. But few of these folks are salaried AT&T workers, and instead are contractors. That means AT&T incurs the expense but has some cushion to pass on higher fuel costs to secondary companies actually doing the driving.

#10: Procter & Gamble

Procter & Gamble (NYSE:PG)Procter & Gamble (NYSE:PG) also is worth more than $180 billion. P&G is in the same boat as Coca-Cola and JNJ. It makes a great number of goods consumers use, from Gillette razors to Bounty paper towels to Crest toothpaste. But it doesn’t distribute those goods. Higher petroleum costs might weigh on some plastic packaging or manufacturing expenses eventually, but in the short term, it’s unlikely that gasoline prices alone will have an impact.

#9: Berkshire Hathaway

Berkshire HathawayWarren Buffett’s Berkshire Hathaway (NYSE:BRK.A, BRK.B) is one of the most iconic investment companies in the world, worth more than $190 billion. But since it traffics in other companies, its exposure to oil and gas prices is limited to its holdings that also would be affected. Right now, BRK is largely insulated from the oil mess thanks to consumer goods holdings — including a 9% stake in the aforementioned Coca-Cola.

See Also: Are the best days of Buffett and Berkshire behind us?

#8: Google

GoogleGoogle (NASDAQ:GOOG) is worth almost $200 billion — and as a high-tech operation that is in the business of making information accessible from anywhere, gasoline prices are not a factor at all. Google exists on servers and makes its money off of ads and clicks.

#7: General Electric

General Electric GEWorth more than $200 billion, General Electric (NYSE:GE) is a massive company — with its tentacles in a host of businesses, from health care to aerospace to nuclear energy to financial services. It is largely insulated from gas prices, except for the expense that rising energy costs will have on its manufacturing businesses. In fact, GE actually could see some strength in its alternative energy division if expensive oil persists and renews a push for nuclear energy or wind power as alternatives. Perhaps the only overt risk is that General Electric does supply airplane parts, so high jet fuel costs could hurt carriers and slow orders somewhat.

#6: Wal-Mart

Walmart (NYSE:WMT)Wal-Mart (NYSE:WMT) is perhaps the first company on this list facing real risks. Valued at more than $200 billion by market cap, WMT certainly has the resources to endure a small hit. However Wal-Mart does a lot of its own distribution from warehouses to store locations — and that’s a negative. Also, Wal-Mart is notoriously located in the suburbs and rural America. Many urbanites have to hop in a car and drive 30 minutes or more if they want to get to a Wal-Mart, and high gas prices sometimes deter that behavior.

#5: Chevron

Chevron Corp. (NYSE:CVX)Ah, big oil! Chevron (NYSE:CVX) certainly won’t be hurting thanks to expensive oil or gas, since that’s how this $220 billion company makes its profits. You can be sure that Chevron is going to do all right thanks to rising oil and gasoline prices simply due to the nature of its business.

#4: IBM

NYSE:IBMLike Google, IBM (NYSE:IBM) is a high-tech outfit with almost zero exposure. The company is worth $230 billion and makes its money selling servers, software and tech services. Gasoline costs are a small factor, but a negligible one.

#3: Microsoft

Microsoft (NASDAQ:MSFT)Once again, we have a huge tech company insulated from oil and gas prices. Microsoft (NASDAQ:MSFT) is worth almost $270 billion thanks to its Office and Windows software. No exposure here.

#2: Exxon Mobil

Exxon Mobil Corp. (NYSE:XOM)Exxon Mobil (NYSE:XOM) is worth $400 billion and, like Chevron, is going to get paid at the pump — not watch its money burn up. The more expensive gasoline and oil prices are in 2012, the better chance that Exxon will break its previous profit records. The last high-water market? You got it — set in 2008, back when crude oil hit a record of almost $150 and motorists were feeling the pain at the pump.

#1: Apple

Apple (NASDAQ:AAPL) takes a lot of flack for being a nearly $500 billion company that has a relatively minimal presence in the U.S. Sure, we all have iPhones and love Apple gadgets — but the company is simply profiting from the design and patents. Other companies make and distribute the gear, and Apple just rakes in the dough. Like other tech stocks on this list, Apple is very insulated from gasoline and oil prices.

See Also: 7 Ways to Buy Apple Without Buying AAPL

Jeff Reeves is the editor of InvestorPlace.com. Write him at editor@investorplace.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.


Article printed from InvestorPlace Media, https://investorplace.com/2012/03/how-gas-prices-will-affect-the-15-biggest-us-companies/.

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