The U.S. economy added 201,000 jobs in August, a streak that’s going on eight years. Meanwhile, the unemployment rate remained at a very low 3.9%. Also, hourly wages increased by 2.9% — the largest monthly increase since April 2009.
That’s great news for employees. It’s not so great for anyone with a large loan or mortgage as interest rates will likely rise for the fourth time this year. But it’s also good for any investors looking for stocks to buy.
It’s clear that American companies are creating jobs in 2018.
But are they good jobs? And are they manufacturing jobs, President Trump’s major platform promise in the 2016 election?
Well, according to statistics at the Bureau of Labor, the top areas for job growth since November 2016 are mining and logging, up 13.5%, and construction, up 6%. Manufacturing jobs have grown just 2.7% since the election — a mediocre result at best.
So, I’m wondering who’s creating jobs. To qualify, a company must have grown the number of employees by 10% in the U.S. over the past five years while generating at least 50% of its revenue in the U.S.
Based on these two criteria, these seven stocks to buy make America great again.
Stocks to Buy to Actually Make America Great Again: Tesla (TSLA)
U.S. Job Growth (2013-2017): 1167%
U.S. Revenue: 53%
While Tesla (NASDAQ:TSLA) CEO Elon Musk said it would cut 9% of its workforce in June, the electric car maker had already hired 8,000 employees in the first half of the year bringing its total workforce to 46,000. Cut 9% of that number, and it brings the total workforce down to slightly less than 42,000 employees.
Say what you will about Elon Musk’s erratic behavior, the man sure has put bread on the table for a lot of Americans, delivering well-paying jobs in California and Nevada.
Not all 46,000 jobs are in the U.S., given that Tesla has a plant in the Netherlands. But most of them are, and that ought to make Tesla one of President Trump’s favorite U.S. companies despite the fact it’s planning a plant in Shanghai.
Skeptics wonder if it will ever get built, but Musk is anything but a quitter. The Model 3 production is coming along with at least 50,000 being produced in the quarter, an average of slightly less than 4,200 per week.
Tesla stock may no longer be investable for some investors, but I see the glass as half full.
Not only is Elon Musk an innovator. He’s also a job creator, and that’s very good for America.
Stocks to Buy to Actually Make America Great Again:Five Below (FIVE)
U.S. Revenue: 100%
Although a significant portion of the jobs discount retailer Five Below (NASDAQ:FIVE) has created over the past five years are part-time, it still managed to add 1,950 full-time jobs since the beginning of 2013, a 260% increase.
If you haven’t heard of Five Below, you’ve apparently been living outside the U.S. over the past five years: it’s the hottest thing in retail.
The retailer announced Q2 2018 results September 7, and they were outstanding. Same-store sales in the quarter grew by 2.7%, 260 basis points higher than analyst expectations with a four-cent beat on the bottom line. And they pushed FIVE stock to an all-time high.
As a result of the company’s solid earnings, five analysts upped their 12-month target price by an average of $30 — and that’s likely too conservative.
I recently called Five Below one of seven growth stocks to buy now.
“Five Below is delivering for shareholders, up 72% year to date. It can’t keep up this blistering pace, can it?” I asked. “Well, the economy has got to cooperate, but even if it doesn’t, the company’s $5 or less concept should be able to withstand a downturn better than other, more cyclical businesses.”
At this point in the company’s history, I see a long runway of growth out west, and that will most certainly translate into a higher stock price.
Stocks to Buy to Actually Make America Great Again: Berkshire Hathaway (BRK.B)
U.S. Job Growth (2013-2017): 31%
U.S. Revenue: >80%
Not only is Warren Buffett a great American because he’s one of the country’s biggest boosters, but he’s also to be commended for the jobs his various companies create on a daily basis.
Some of the Berkshire Hathaway companies creating jobs over the past 14 years, according to Bloomberg, include Geico (+17,300), Berkshire Hathaway Energy (+11,332) and Clayton Homes (+9,226).
Sure, there have been job losses. Almost 8,000 have disappeared at flooring manufacturer Shaw Industries, and its General Reinsurance subsidiary has seen 1,604 jobs go over the past 14 years.
Jobs do disappear from time to time as restructurings are undertaking. However, net-net, Warren Buffett is creating jobs, not destroying them.
Stocks to Buy to Actually Make America Great Again: Charles Schwab (SCHW)
U.S. Revenue: >90%
Although Charles Schwab (NYSE:SCHW) does have subsidiaries serving clients in the UK, Hong Kong, Singapore and Australia, it’s the branch offices in 46 states, its online business, and mutual fund and ETF products that generate the lion’s share of the company’s annual revenue.
Considering the increasing role of technology in financial services, you would think that the number of employees would have decreased in recent years, but Schwab’s done an excellent job blending high tech with high touch, resulting in annual revenue and earnings growth of 12% and 20% respectively over the past four years.
Schwab’s discount brokerage services continue to face intense competition from the likes of Robinhood, who offers free stock trades, however.
Now, it appears that JPMorgan Chase & Co. (NYSE:JPM) is getting into online trading with fees that will go as low as free for the wealthiest of its clients and $2.95 a trade for the regular folk.
“When it comes to retail brokerage commissions, the race to zero is over and consumers won,” Nicholas Colas, cofounder of DataTrek Research, said in a recent report. “Expect to see major online brokers match JPMorgan’s pricing structure soon.”
While this will put downward pressure on profit margins in the short term, thus far Schwab’s always found a way to cope.
Stocks to Buy to Actually Make America Great Again:Costco (COST)
U.S. Revenue: 73%
Costco doesn’t break out the number of U.S. employees versus those in Canada and elsewhere. However, an educated guess would suggest the U.S. number isn’t too far off the percentage of revenue generated in the U.S.
What I find interesting is that over the past five years, Costco’s grown its number of full-time employees by 29% and part-time by 21%.
Critics of retail companies and the jobs they create often point to the fact most of them are part-time and lower-paying. The stats over the past five years would suggest otherwise.
As my InvestorPlace colleague, Bret Kenwell recently stated, Costco is still among the best retail stocks to buy, not the least of which is because it continues to do right by employees.
The cardinal rule of any business should be: Treat your employees right, and they’ll treat customers the same way which translates into higher shareholder returns.
Costco creates better-paying retail jobs. What could be more American than that?
Stocks to Buy to Actually Make America Great Again:Vulcan Materials (VMC)
U.S. Job Growth (2013-2017): 17%
U.S. Revenue: >90%
Vulcan Materials (NYSE:VMC) is one of those mining and materials companies that created jobs in Trump’s America. And it seems to be paying off for shareholders.
In the second quarter ended June 30, VMC grew revenues by 16% to $1.2 billion while its net earnings rose 33% to $160 million, an impressive net margin of 13.3%.
Honestly, if I weren’t writing a story about seven companies that are making America great again, I’d have never considered this stock as a possible holding for my portfolio.
However, I look at its financials over the past five years, and it’s hard to find fault with Vulcan’s business.
Revenues have grown by $1.1 billion over the past four years — from $2.8 billion in 2013 to $3.9 billion in 2017. Meanwhile, net profits have rebounded nicely from $20.8 million in 2013 to $601.2 million in 2017.
Over this five-year period, VMC stock’s averaged an annualized total return of 16.8%. Down 14.6% year to date through September 12, a bet on VMC stock is a bet on the construction industry needing lots of aggregates in the next 12-24 months.
If the economy’s willing, Vulcan shareholders should do nicely indeed.
Stocks to Buy to Actually Make America Great Again: UPS (UPS)
U.S. Revenue: 79%
In June, United Parcel Service (NYSE:UPS) was headed for a big strike. Thankfully, for shareholders, it managed to work out a five-year deal with unionized employees that keep the trucks rolling out for deliveries for the next five years, a big reason I recently called it a pro-labor stock to own.
UPS might not be as flashy as FedEx (NYSE:FDX), it still puts up pretty good numbers.
“The sell-off [February] and benefits from tax reform mean that UPS now is trading at just 15x the midpoint of its guidance for 2018,” InvestorPlace’s Vince Martin stated in August. “And the stock yields a healthy 3.4%. Investors clearly see a risk that growth will decelerate, but UPS stock is priced as if that deceleration is guaranteed.”
I agree with my colleague.
It trades at a lower P/E than FDX and yet UPS’s yield is three times as high. Although I’ve been a fan of FedEx for years — it’s always a buy in my opinion — UPS stock deserves better considering how many jobs it’s created over the past five years.
As of this writing Will Ashworth did not hold a position in any of the aforementioned securities.