President Trump has many characteristics but every once in a while, as an investor you have to ensure you are protected against his twitter comments. Whether that is increasing tariffs against China or anyone else; whether it is comments on the economy and how to keep it strong; or what industries he loves or does not like. One method to protect yourself is to buy companies with strong US sales under the expectation they will continue to sell many items well.
Ian Tam works at Morningstar Research and his criteria to produce a list for your consideration was:
use the S&P 500 stocks
quarterly sales momentum (last 4 quarters of revenues compared with same figure 1 quarter ago
sector-relative price-to-sales – a value metric comparing the company’s price to sales ratio against the median sector
historical relative price to sales – comparing the P/S ratio against the stock’s own median over the last 10 years
To read the table a P/S ratio of 0.3 means it is 70% lower than the sector to which it belongs.
To qualify a company must have a sales to total assets ratio greater than 0.5 to ensure it has enough sales to cover its debt. 0.5 is the median sales to total assets ratio of the S&P 500 Index.
Company Mkt Cap Qtrly Sales Sector/Rel Historical Sales to Dividend
$ bil Momen % P/S Ratio P/S Ratio T.A. Ratio Yield %
Quanta Services 5.367 6.5 0.3 0.6 1.4 0.4
Marathon Pete 40.033 12.5 0.1 1.1 1.3 3.6
CVS Health 71.793 2.9 0.1 0.6 1.2 3.6
McKesson Corp 24.108 3.1 0.0 0.6 3.3 1.2
Amerisource Bergen 16.351 3.7 0.0 0.7 4.2 2.19
Cardinal Health 14.584 3.1 0.0 0.7 3.4 3.9
LKQ Corp 8.800 4.3 0.5 0.5 1.0 0.0
CBRE Corp 16.801 3.7 0.1 0.8 1.6 0.0
Walgreens Boots 48.403 2.9 0.2 0.6 1.8 3.3
L Brands 6.698 1.3 0.3 0.4 1.6 4.9
The other companies on the list were
Campbell Soup, American Airlines, Facebook, Jacobs Eng and Nucor
Linking to dividend paying stocks, at least 5 of the names are in health care which indicates no matter the economy, people are still going to need health care. It might be a good idea to ensure your portfolio has some health care to protect you. The numbers allow you to be as defensive as possible. In this case, Morningstar Research provided some details but your company you buy stock has similar information. Narrow the field, at least that is what dividend investing tries to do. You may miss some opportunities but the number one rule in investing is try not to lose money.
There are more questions than answers, till the next time – to raising questions.