by Alyssa Oursler | January 25, 2013 11:28 am
If you’re looking for profits in 2013, you might not have to look very far.
As China’s once-booming growth keeps cooling and Europe still faces a pile of problems, the U.S. is looking increasingly like the least-ugly option. The fiscal cliff is in the rear-view mirror, the debt ceiling has been diffused (for now) and domestic companies could be set to boom as a result. Hedge-fund manager David Tepper, for example, says the U.S. is “on the verge of an explosion of greatness.”
If you’d like to see some of that greatness turn into green, an all-American portfolio could be just the place to start. Finding American-focused companies can be a bit tricky, though. Even some of the most seemingly American big-business names often get huge chunks of revenue overseas, such as Real America Index member Coca-Cola (NYSE:KO) or Yum Brands‘ (NYSE:YUM) KFC.
So, we sorted through the S&P 500 and picked one company from each sector, making sure every selection gets most, if not all, of its revenue right here in the homeland. The resulting portfolio is a solid batch of home-grown companies that, combined, have outpaced the market during the past 12 months with impressive 17% returns. As the U.S. gets on a roll, that number could keep on climbing.
Let’s take a look at the individual picks:
Sector: Consumer Staples
12-month Performance: +24.9%
Walgreens (NYSE:WAG) and CVS Caremark (NYSE:CVS) each get 100% of their revenue here in the U.S., but we had to give the nod to CVS for this portfolio.
Why? Well, the same reasons it got a spot in our Real America Index: CVS Caremark is the largest pharmacy healthcare provider in the U.S., the No. 1 provider of prescriptions and the No. 1 specialty pharmacy.
That kind of presence has paid off for investors too, as CVS has added nearly 25% to its value during the past 12 months, including an 8% gain so far this year. According to Standard & Poor’s, the company is estimated to grow earnings per share by 32% for FY2012, topped by growth of 17% in FY2013.
Tack on a decent 1.7% dividend, and it’s the perfect pick for our home-grown portfolio.
Sector: Consumer Discretionary
12-month Performance: +24.5%
What’s more American than big-box discount retail?
Representing the consumer discretionary sector in our stock bundle, we have one-stop shop Target (NYSE:TGT). While rival Walmart (NYSE:WMT) has a global presence, this company is all about the red, white and blue, getting just about all of its sales in the States.
In fact, Target just recently started looking beyond our borders for expansion. It was first working on squeezing smaller-format stores into cities and now is planning to open its first batch of Canadian stores this March.
Still, the bulk of its stores are located in the U.S. and can thus benefit from the expected American boom — especially since it offers everything from frames to fashionable clothes, and toys to TVs. Oh yeah, and an almost 25% return for investors in the past year, which includes a 2.3% dividend yield.
We’re off to a good start.
12-month Performance: +22.5%
Union Pacific (NYSE:UNP) is an all-American pick if I’ve ever seen one, right down to the logo.
The company’s principal unit is its railroad, of course, which links nearly half of our states in the Western two-thirds of the country.
The stock also boasts a 2.1% dividend, 20% gains in the past 12 months, and eye-popping growth on the income sheet. UNP is expecting revenue of $22.3 billion and an EPS of $8.24 per share in FY2012, representing growth of almost 60% and 120%, respectively, since 2009.
Heck, revenue and earnings have increased every single quarter for the past three years. All aboard!
12-month Performance: +17.9%
Most people think of the “big four” when they think of U.S. banks, but we decided to go with the fifth-largest bank by assets: U.S. Bancorp (NYSE:USB).
While Wells Fargo (NYSE:WFC) was a possibility — since, unlike JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC) or Citigroup (NYSE:C), it doesn’t have much exposure to international markets — we stuck with one focused on domestic lending.
This super-regional bank has roared back from the financial crisis of 2009, increasing its earnings by 200% since then, including year-over-year gains of 78% and 42% in 2010 and 2011. Such rocket growth is slowing, of course, but it’s hardly dead. In 2014, USB expects another double-digit gain.
Plus, the company rewards investors with a solid 2.3% dividend.
12-month Performance: +16.3%
As the U.S. continues its quest for energy independence, it will look more and more to domestic energy companies. One such example is Southwestern Energy (NYSE:SWN), which receives all of its revenue from the U.S.
The natural gas company is exploring shale opportunity in Pennsylvania, Texas, Arkansas and Oklahoma. It owns acreage in Canada, but hasn’t started drilling or pumping crude and deferred its capex program there until late 2013.
Earnings for the company are expected to slip some this year, but it should regain that lost ground by 2013. And over the last 12 months, SWN has still managed to climb a rock-solid 16.3%, besting the 14% performance of the broader market.
In fact, the stock jumped double digits earlier this week on rising natural gas prices.
12-month Performance: +16.1%
Head to Nucor‘s (NYSE:NUE) company website, and its passion for the stars and stripes is clear. The first page says Nucor is “ready to help America get back to being a nation that innovates, makes and builds things.”
It has been doing just that.
Nucor is the largest producer of steel in the U.S. and the largest recycler in all of North America, with countless industry innovations on its resume. It pioneered and popularized the mini-mill that now accounts for 60% of U.S. steel production, and also was the first to employ thin-slab casting.
For investors, those kinds of successes have translated to 16.1% gains over the last year, topped off with a hefty 3.1% dividend yield.
12-month Performance: +15.1%
The countless Americans walking around texting on their Apple (NASDAQ:AAPL) iPhone or Samsung Galaxy are getting that phone service from somewhere … and it’s a good chance that somewhere is Verizon.
The company has a huge 4G LTE network, on top of offering high-speed Internet. Plus, it has partnered up with Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC) in an attempt to draw in more customers.
Like any telecom, Verizon doesn’t offer much in the way of growth, but makes up for it with yield. VZ rewards shareholders with a 4.8% dividend that looks set to keep on growing.
What more do you need to know?
12-month Performance: 12.7%
Technology is an increasingly global game. In fact, out of all the S&P 500 sectors, technology brings in the largest chunk of its revenues internationally: 57%. Not surprising when you think of global names like Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC).
Some companies would rather stay home than go big, though, and one such example is Intuit (NASDAQ:INTU). Intuit is the name behind familiar products like TurboTax and Quickboooks, providing business and financial management technology for small businesses and consumers.
The company has increased earnings by over 20% the last three years, and is expected to post another double-digit gain in the coming year. That growth has been organic, too, with revenue climbing for 12 consecutive quarters. In 2013, Intuit is expected to do more than $120 billion of sales.
12-month Performance: +12.6%
Utilities fall on the other end of the spectrum; it is the sector with smallest amount of international revenue. Unsurprisingly, a whopping 81% of its business is done here at home.
One big player in that space is American Electric Power (NYSE:AEP), and the name pretty much says it all. AEP’s service area covers portions of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia — the homelands of our home.
Just as countless Americans depend on companies like AEP for electricity, investors can depend on companies like AEP when they’re looking for dividends, too. With a quarterly payout of 47 cents, shareholders get a nice 4.25% yield.
Not a bad cherry on top of double-digit 12-month gains.
12-month Performance: +8.5%
Between aging Baby Boomers and the Affordable Care Act, healthcare is becoming an increasingly important part of American society. Heck, just look at the Dow Jones Industrial Index. When Kraft Foods (NASDAQ:KRFT) exited, UnitedHealth Group (NYSE:UHP) was chosen to replace it because of the “fast growing importance of health care spending in the U.S. economy.”
With that in mind, UnitedHealth Group was an obvious pick to round out our Made-In-America Index. While it’s the worst-performing stock of the 10 during the past year, there’s still plenty to like. Earnings have been steadily climbing since the recession, with 12 straight quarters of growth, and that trend is expected to continue. Plus, by 2014, UnitedHealth expects revenue of $136 billion — more than a 20% increase from the 2010 total.
As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities.
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