American Rebound: Long-Term Investors Remain Bullish on the USA

Becca Lipman, Kapitall, The Motley Fool
Updated

"There'll always be some sort of crisis facing any country, and the key is to find a way to fight through it and figure out how to prosper." That's a quote from Carl Delfeld, and he believes America will rebound.

And why shouldn't he? The market has crashed before, and America has pulled through time and time again. Sure, the USA appears to be in big trouble now, but what country isn't facing challenges? Try countrywide famine, drought, epidemics, and warfare ... It's not hard to find countries that have it much, much, worse.

To those who say that, "This is the end," please take a moment to look at the facts: America is an incredibly prosperous country and is still leagues ahead of many of the nations prematurely labeled as threats to America's global dominance.

To summarize Delfield, contributing editor of Investment U, here are the reasons he and many optimists believe America will find itself on track, once again, to a healthy and bullish future.

  • Made in the USA: Despite what you may believe of China, America is still the world's leader in manufacturing. America is also the third largest exporter in the world and has the potential to increase that number (currently 2% of small and medium U.S. companies). This expansion presents enormous opportunity.

  • Greater productivity per capita: "Although the United States population is about one-fifth the size of China, the American economy is still three times bigger."

  • Above the fruited plains: America's contributes to 20% of global agricultural activity and has enough land available to significantly expand that number: America "has twice the arable land of China (which is 25% desert) and its farms are the most productive in the world."

  • Energized: It may not always be green and easy to reach, but America has a very impressive supply of energy resources, including coal and natural gas. American also has more fresh water and clearer air than China -- profitable both in the short and the long term (think of the health-care savings).

  • Show me the money: "America is still the No. 1 destination for foreign direct investment. On a cumulative basis, it has four times that of the United Kingdom and six times that of China."

  • Free Market Value. The invisible hand of supply and demand seems to know few limits in America. "The market values of ExxonMobil and Apple alone are greater than the market value of the entire Shanghai stock market."

It has been said before; the current drop in share value is presenting a significant opportunity to buy into companies at discounted prices. If you are bullish on America, there seems to be no time like the present.

To help you get a perspective on the market's future, we've taken a look at S&P 500 companies experiencing insider buying in addition to institutional buying.

The "smart money" seems to think there's upside potential to these names. Do you agree?

(Click here to access free, interactive tools to analyze these ideas.)

1. American International Group (NYS: AIG) : Property & Casualty Insurance Industry. Market cap of $42.83B. Current price at $22.58. Net institutional shares purchased over the current quarter at 17.4M, equivalent to 7.62% of the company's 228.46M share float. Net insider purchased over the past 6 months at 6,982,680 shares, equivalent to 3.06% of the float. The stock is currently stuck in a downtrend, trading -20.25% below its SMA20, -20.74% below its SMA50, and -36.36% below its SMA200. It's been a rough couple of days for the stock, losing 21.02% over the last week.

2. Motorola Solutions (NYS: MSI) : Communication Equipment Industry. Market cap of $13.53B. Current price at $39.44. Net institutional shares purchased over the current quarter at 21.2M, equivalent to 7.59% of the company's 279.46M share float. Net insider purchased over the past 6 months at 17,600,969 shares, equivalent to 6.3% of the float. The stock is currently stuck in a downtrend, trading -10.41% below its SMA20, -12.79% below its SMA50, and -14.23% below its SMA200. It's been a rough couple of days for the stock, losing 10.24% over the last week.

3. Medtronic (NYS: MDT) : Medical Appliances & Equipment Industry. Market cap of $32.96B. Current price at $31.07. Net institutional shares purchased over the current quarter at 73.6M, equivalent to 6.94% of the company's 1.06B share float. Net insider purchased over the past 6 months at 100,000 shares, equivalent to 0.01% of the float. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 3.12%, current ratio at 1.93, and quick ratio at 1.57. The stock is currently stuck in a downtrend, trading -13.9% below its SMA20, -17.26% below its SMA50, and -17.49% below its SMA200. It's been a rough couple of days for the stock, losing 10.92% over the last week.

4. Citigroup (NYS: C) : Money Center Banks Industry. Market cap of $81.63B. Current price at $27.95. Net institutional shares purchased over the current quarter at 68.7M, equivalent to 2.36% of the company's 2.91B share float. Net insider purchased over the past 6 months at 362,524 shares, equivalent to 0.01% of the float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.52). The stock is currently stuck in a downtrend, trading -27.02% below its SMA20, -28.66% below its SMA50, and -36.23% below its SMA200. It's been a rough couple of days for the stock, losing 27.36% over the last week.

5. MEMC Electronic Materials (NYS: WFR) : Semiconductor Circuits Industry. Market cap of $1.15B. Current price at $4.98. Net institutional shares purchased over the current quarter at 3.1M, equivalent to 1.35% of the company's 229.27M share float. Net insider purchased over the past 6 months at 12,300 shares, equivalent to 0.01% of the float. The stock is currently stuck in a downtrend, trading -32.98% below its SMA20, -39.86% below its SMA50, and -55.33% below its SMA200. It's been a rough couple of days for the stock, losing 32.88% over the last week.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Becca Lipman does not own any of the shares mentioned above.



At the time thisarticle was published The Motley Fool owns shares of American International Group and Medtronic. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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