Scared of a potential euro disaster affecting America? Below, we take a look at all-American companies: companies that sell only in America, have their revenues denominated in USD, and are protected from a potential euro disaster. We take a look at diverse sectors such as consumer products and services, energy, industrials and transportation and a few REIT and ETF options as well.
For those who are bullish on the USD relative to other currencies, it’s worth taking a look at the companies mentioned below. Remember, the world loves currency wars; recently, countries have been fighting to devalue their currency so that exports increase. They justify this by saying that they are simply following the J-Curve.
Companies with exposure to different currencies around the world face currency risk, which investors can eliminate if they target companies that have purely American operations. Today it’s the euro problem, tomorrow we might have the Australian dollar in the news facing potential devaluation. You never know. Be safe and go all American!
Consumer Products and Services
Tractor Supply Co. (TSCO ): Tractor Supply is a large retail chain of stores offering products for home improvement, agriculture, lawn maintenance, livestock and pet care. Livestock and pet products are the two sources that add most to the company’s revenue. The products they offer make it evident that the focus of the company is on the rural lifestyle in the U.S. To have a rural lifestyle company that sells only in the U.S. in one’s portfolio would make for great diversification. The company started paying its first dividend in 2010, which has been going up and down.
Flowers Foods Inc. (FLO ): Headquartered in Thomasville, Ga., FLO is a leading producer and marketer of packaged bakery foods in the United States. The company operates 47 highly efficient bakeries that produce breads, buns, rolls, snack cakes, and pastries, which are distributed fresh to retail and foodservice customers through a network of independent distributors, and frozen to national retail and foodservice customers. Their main product is bread, a staple diet of Americans, thus the company can be categorized as “a recession-proof company”. Revenue and profits increased even during the 2007-2008 recession. FLO has a history of paying quarterly dividends since 2000.
AGL Resources (GAS): The company markets and distributes natural gas in seven U.S. states and is a champion dividend payer. It paid a $0.27 dividend in the year 2000 and currently pays a $0.57 dividend. The U.S. gas industry is expected to grow over the long term as natural gas prices have come down substantially. Natural gas is an abundant and cheap commodity and can be easily transported in liquefied form. In 2014, the U.S. was one of the largest natural gas producers.
Eversource Energy (ES ): Eversource is a Fortune 500 energy company involved in the distribution, transmission and generation of energy. The company’s electric distribution segment provides electricity to retail customers in Connecticut and eastern Massachusetts. The electric transmission segment owns and maintains transmission facilities that are part of an interstate power transmission grid, over which electricity is transmitted throughout New England. The natural gas distribution segment provides firm natural gas sales service to retail customers who require a continuous natural gas supply throughout the year, such as residential customers who rely on natural gas for heating, hot water and cooking needs, and commercial and industrial customers who choose to purchase natural gas from the company’s natural gas distribution companies. The company has increased its quarterly payout since 2000.
Industrials and Transportation
JB Hunt Transport Services (JBHT ): JBHT provides surface transportation and logistics services in the U.S., Canada and Mexico. Trucking moves 70% of all tonnage transported domestically. Approximately 60% of the company’s revenues and 75% of its profits come from the intermodal part of its business. The company has a dividend-paying history right from 1988. For further analysis, check out this article on how to analyze transportation stocks.
Waste Connections (WCN ): The company operates in four segments: Western, Central, Eastern and E&P. The solid waste industry in the U.S has three major players, Waste Connections, Waste Management, and Republic Services, who combined generate more than 50% of industry revenue. There are two smaller companies, Stericycle and Progressive Waste Solutions. With a few firms dominating the entire market, this market can be categorized as “oligopolistic” and with waste growing as every year goes by, this company is worth researching.
REITs, or Real Estate Investment trusts (check out this guide to REIT dividends) have very high dividend yields and are required to distribute at least 90% of their earnings as dividends. Some of the REITS that operate properties specifically in the U.S. are mentioned below, however their tenants may have international operations and may not be as protected from a potential euro disaster.
Boston Properties: An office REIT investing in office buildings and earning income from their tenants’ rent. Most tenants in office REITs have long-term leases, making for a steady income stream. Investors considering an investment in an office REIT should consider the local unemployment rate, the local economy and vacancy rates. Boston properties has a significant presence in Boston, New York, San Francisco and Washington, D.C.
Realty Income Corp.: For a geographic distribution of Realty Income Corp., visit their website. Some of their tenants include Walgreens, FedEx, Dollar General, LA Fitness, Diageo and the U.S. Government, to name a few, who all have multiple properties that they use which belong to Realty Income.
An ETF that you might want to consider is the WisdomTree Strong Dollar US Equity Fund. It seeks to track the investment results of American companies while maximizing exposure to companies with a significant revenue from within the U.S.
The Bottom Line
For those investors who want a pure play on American companies that have little to no exposure to currency wars, and want to avoid export risk and believe in the domestic growth story, the above companies should all be taken into consideration. Further, the addition of an all-American company can aid in diversifying one’s portfolio.
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