These U.S. Retail Stocks Are Immune to European Woes
With continued turmoil, bailouts, and endless new rounds of parliamentary elections taking place almost daily in Europe, investors want to find assets that are not exposed to the economic uncertainty in the region.
We began a search in the retail sector for firms that have exposure solely in the U.S. marketplace and show potential for further growth. We found three companies whose share prices have benefited from consumer behavior in America as well as consistent and steady dividend distribution.
Our top picks
The first of these is Dollar Tree (NAS: DLTR) . Renowned as a center for discount retailing and a place that consumers turn to in difficult economic times, this company has benefited from the economic stagnation that has become apparent over the past few months. The dollar store franchise's stock is up over 20% this calendar year, and with consumers still unsure as to whether or not the economy is gaining steam, it is likely they will continue to frequent this retailer in large numbers.
Walgreen (NYS: WAG) is another company in this sector who is presenting itself as an attractive buy right now. After its share price took a decline following a conflict with its prescription provider, Express Scripts, at the beginning of this year, the stock now offers itself at an reasonable price point with remaining room for growth. The share price currently hovers just above the 52-week low, yet the company still displays a sound balance sheet and pays out a healthy 2.9% dividend yield. Between these factors, and because Walgreen's derives 100% of its revenue from the U.S., average analysts rate it as a moderate buy.
The final retailer we found who is totally reliant on business in the United States is CVS Caremark (NYS: CVS) . After gaining business from the customers Walgreen's lost in the early part of 2012, CVS saw a 14% rise in revenues over the same time. As competitors like RiteAid (NYS: RAD) are likely to struggle going forward, and Walgreen's has an unorganized prescription business, it would appear that CVS will maintain a competitive advantage in the mid-price retail business along with freedom from European problems.
Business section: Investing ideas
With a lack of exposure to European markets, all of the names mentioned above offer different advantages and opportunities to operate in a sound environment.
Click here to access free, interactive tools to analyze these ideas.
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 Dan Connelly does not own any of the shares mentioned above.
At the time this article was published Motley Fool newsletter services have recommended buying shares of Express Scripts Holding. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.