One by one, multinational companies are repeatedly citing Europe and the global economic slowdown as their main reasons for misses this earnings season. Overseas investments were considered safe havens not long ago, but these days U.S. equities are the place for your hard-earned dough.
Another day dawns
Emboldened by last week's resurgence of the Dow to 13,000-plus territory, the S&P 500 is up more than 8% year to date versus a nearly 1% decline for the MSCI World Excluding-U.S. Index. During the same period, France's CAC 40 index is up nearly 2%, the British FTSE is off more than 1%, and China's Shanghai Index is down roughly 2%. It comes as no surprise, then, that multinational heavyweights -- like McDonald's, Apple, and Starbucks, which, respectively, derive 68%, 62%, and 36% of their revenues internationally -- are blaming disappointing results on festering global economic headwinds and a strong U.S. dollar.
Amazingly enough, the flight to safety now appears the to be good ol' U.S.A. And as my Foolish colleague Eric Bleeker points out, American companies are surging anew because of several factors, including a recapitalized banking system and reduction of consumer debt. As Eric states, "Reforms, trends, and timing are all tipping in America's favor."
So just how might a savvy investor seize these opportunities?
Look within our borders for great U.S.-based companies that derive nearly all their revenues domestically. I screened for companies headquartered in the U.S. that derive 1% or less of their revenues internationally, boast market capitalizations of at least $3 billion, and enjoy annual revenues greater than $1 billion. I've also concentrated on sectors that have outperformed year to date and still hold plenty of upside potential -- namely, consumer discretionary, health care, and financial services.
Let's take a look at five noteworthy companies that fit the bill.
Quarterly Earnings Growth (Year Over Year)
PEG Ratio (5-Year Expected)
Panera Bread (NAS: PNRA)
Chipotle Mexican Grill (NYS: CMG)
Lowe's (NYS: LOW)
Express Scripts (NAS: ESRX)
US Bancorp (NYS: USB)
Source: Yahoo! Finance.
Watch industry disrupters Panera and Chipotle continually spice things up in the fast-food space. Both companies offer refreshing alternatives to artery-clogging burgers and fries, boast little to no debt on their svelte balance sheets, and enjoy vigorous cash flows allowing them to expand into new markets, make capital expenditures, and buy back shares. Both companies possess massive global growth opportunities. While Panera beat both top- and bottom-line expectations recently, Chipotle stumbled, sending its share price tumbling more than 20% in one day. That sets up a great opportunity for growth investors to consider shares at a much more attractive valuation than a month ago.
Lowe's caters to everyone from clumsy DIY customers to professional contractors. While the housing downturn certainly put pressure on sales, a recovery in the U.S. economy will increase spending at home-improvement retailers. Lowe's boasts robust free cash flow and recently posted a strong quarter. And, while watching the U.S. recovery expand, you can enjoy Lowe's 2.5% dividend yield, which it's increased for nearly 50 consecutive years.
The world's largest pharmacy benefit management company, Express Scripts, recently acquired Medco, thereby doubling its size, gaining increased growth and the possibility of improving margins. Express Scripts has a healthy record of integrating big acquisitions. Since it makes the majority of its earnings by selling mail-order generic drugs, the wave of branded drugs that are going generic provides massive opportunities for the company.
Obviously, the U.S. banking industry is facing many challenges, but US Bancorp appears a diamond in the rough. With a market presence mostly in the Midwest and on the West Coast, this financial-services company employed consistently conservative lending practices through the heady banker days of the early to mid-2000s. Very little of US Bancorp's revenue is derived from investment-banking activities. Because of its small investment-banking arm, it's had limited involvement in mortgage securitization, which has ultimately led to less liability for both the company and its shareholders.
Consider these stars-and-stripes companies for a portion of your portfolio while keeping in mind that -- in both the worlds of physics and investing -- what goes up must come down. While American companies with little international revenue may appear the portfolio darlings today, this won't always be the case. Diversification across all asset classes, geographies, and sectors is your best long-term safeguard.
As you consider great stocks for building your long-term portfolio, you certainly don't want to miss out on the ones in our special report. For good reason, our Foolish analysts have dubbed them "The Stocks Only the Smartest Investors Are Buying." Check them out in a free report -- it won't be available for long, so grab your copy today.
The article 5 American Companies Deserving of Your Dollars originally appeared on Fool.com.
Fool contributorNicole Seghettiowns shares of US Bancorp. You can follow her on Twitter,@NicoleSeghetti. The Motley Fool owns shares of Panera Bread, Express Scripts, and Chipotle Mexican Grill.Motley Fool newsletter serviceshave recommended buying shares of Chipotle Mexican Grill, Panera Bread, and Express Scripts and writing covered calls on Lowe's. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.