In case you didn’t notice, the US markets during President Biden’s first 100 days in office, have done better than in the first 100 days of any presidency all the way back to FD Roosevelt!
With the US economy growing at an annual pace of more than 6.4% and economists expecting a surge in spending on travel and entertainment post a successful drive on inoculations, there is a new sense of optimism And then there’s the Federal Reserve, priming the pump!
QUARTER GONE BY
While India got badly impacted with Covid in recent days and indices remained in a whipsawed range, US markets have been extremely robust.
Below is a list of 20 stocks among the S&P 500 that have had the highest total returns (with dividends reinvested) since Biden took office Jan. 20 and the other column showing returns since election day.
|COMPANY||TICKER||TOTAL RETURN – JAN. 20 THROUGH APRIL 30||TOTAL RETURN – NOV. 3 THROUGH APRIL 30|
|Seagate Technology PLC||STX||53%||88%|
|L Brands Inc.||LB||45%||95%|
|Wells Fargo & Co.||WFC||39%||105%|
|Dish Network Corp. Class A||DISH||38%||70%|
|News Corp. Class A||NWSA||38%||95%|
|Western Digital Corp.||WDC||36%||88%|
|Mohawk Industries Inc.||MHK||36%||76%|
|Kansas City Southern||KSU||36%||60%|
|Diamondback Energy Inc.||FANG||36%||195%|
|Avery Dennison Corp.||AVY||35%||49%|
|Iron Mountain Inc.||IRM||35%||53%|
|Capital One Financial Corp.||COF||34%||93%|
|Robert Half International Inc.||RHI||34%||71%|
The strong momentum in quite a few and maybe even unknown (in India) stories seen in the US makes a strong case for Indians to use the Liberalised Remittance Scheme and park at least 10% of their savings abroad if not the full USD 250,000 allowed. Not only does the US market allow diversification but makes for a great portfolio allocation for the sheer growth. Remember you can always open your brokerage free account at https://pl.vested.co.in/ and start investing in a couple of days!
In case you are looking for some specific themes now in the US, we present below a motley collection of stories doing the rounds in US media and research houses and present them thematically, for you to do your own shortlisting and research. Note that these are not Prabhudas Lilladher recommendations as we do not cover the US markets except via our technical research reports available at https://www.plindia.com/
If there’s one thing investors want in the stock market, it’s high yield dividend stocks that can produce a steady income stream that can sustain them throughout their life. if you allocate a portion of your investments into top dividend stocks, you may be surprised at the calming effect that it brings to your portfolio.
Some of the Top Dividend Yield Stocks doing the rounds now in the US are
Realty Income (REIT)
Realty Income yields a dividend of 4.2% currently- it operates as a real estate investment trust (REIT) which leases its portfolio of thousands of commercial properties to notable clients globally. The REIT has delivered more than 600 quarters of continuous dividend payouts and raised dividends for more than 90 consecutive quarters.
AbbVie is a biotech company that operates as a research-based pharmaceutical manufacturer. A Buffet stock, the drugmaker’s biggest moneymaker is Humira, accounting for nearly half of last year’s top line of $45.8 billion. With over 47,000 employees around the globe, it continues to come up with new approaches to address today’s health issues. The company has a broad portfolio of treatments in the field of oncology, immunology, and neuroscience to name a few. Abbvie’s dividend yield stands at approximately 4.7%.
Chevron Corporation is one of the leading integrated oil and gas companies in the United States. Many investors, including Warren Buffett, love CVX stock because it has a strong balance sheet and good growth prospects. After all, we are talking about a company with a history of 140 years. And more importantly, it has an attractive dividend yield of more than 5%.
When looking for top dividend stocks, Exxon Mobil usually comes to mind. It is one of the largest oil and gas companies by market cap. For an oil giant with upstream and downstream services in the energy market, the recovery in oil prices has certainly helped with reassuring investors. XOM stock currently has a dividend yield of around 6%.
A few good indicators for highlighting undervalued stocks are low share prices, a decent price-to-earning ratio, and a high percentage of growth in the earnings-per-share value. Even among these sectors, companies which outperform peers are the best bets.
Nucor is an American steel manufacturer, has a price-to-earning ratio of 15 and is presently trading at well below peak value since there are lingering uncertainties about production delays due to supply chain issues.
A banking company based in Delaware, SLM has also outshone peers with share price rising by 14% in the past four weeks. The bank has also posted positive quarterly results, beating analyst estimates for earnings-per-share by over 50%.
An electric utility headquartered in Ohio, FirstEnergy has performed remarkably well considering it is fighting not only the pandemic but also a court case related to bribery. The price-to-earnings ratio for the firm is at 15 and the share price has been on a consistently upward trajectory over the past three months.
New York Community Bancorp, Inc.
New York Community Bancorp, Inc. is a Westbury-based banking firm. It was founded in 1859. The bank has a market cap of more than $5 billion and posted more than $1 billion in annual revenue in 2020.
KeyCorp (NYSE: KEY) is a Cleveland-based banking company. The firm is the 25th largest bank in the US and the only major one based in Cleveland. The services it offers include deposits, investment and personal finance, as well as student loan refinancing and mortgages. The bank has more than 1,000 branches and 1,400 ATMs in several different US states. It was founded in 1849.
eBay Inc. (NASDAQ: EBAY) is a San Jose-based e-commerce firm. It operates a website that facilitates deals between sellers and buyers. The firm was founded in 1995 and is placed sixth on our list of 10 best undervalued stocks to buy now. The company has a mobile application for users as well to complement the main website.
Algorithmic firms often give scores to many independent variables that pick out a company as a best buy idea – such scores are given to the fundamentals of the stock itself, growth, technical indicators as well as the behaviour of institutions vis-à-vis the stock. Below are some names being talked about in US Media and research houses:
Echo Global Logistics Inc
Echo Global Logistics is a leading provider of technology-enabled transportation and supply chain management services. The stock is also trading with a Forward 12M P/E of 15.34.
Hillenbrand Inc (HI)
Hillenbrand has evolved into a diversified holding company known for having industrial businesses such as Coperion, Milacron Injection Molding & Extrusion, and Mold-Masters, in addition to death care leader Batesville in its portfolio. Revenue was $2517.0M in the last fiscal year compared to $1770.1M three years ago, Operating Income was $328.8M in the last fiscal year compared to $239.6M three years ago, The stock is also trading with a Forward 12M P/E of 14.92.
Fuller is a major American adhesives manufacturing company and supplies industrial adhesives worldwide. Forward 12M Revenue is expected to grow by 1.18% over the next 12 months, and the stock is trading with a Forward 12M P/E of 18.93.
Regal Beloit Corp (RBC)
Regal Beloit Corp is one of the largest electric motor manufacturers in the world. Its brushless DC electric motors are found in almost all variable-speed residential HVAC systems in the U.S., and it also provides many electric motor brands throughout the industrial sector. EPS was $4.64 in the last fiscal year compared to $5.26 three years ago, and ROE was 7.82% in the last year compared to 10.05% three years ago. The stock is also trading with a Forward 12M P/E of 20.59.
Spx Corp (SPXC)
SPX Corp is a supplier of highly engineered infrastructure equipment and technologies. EPS was $2.12 in the last fiscal year compared to $1.81 three years ago, and ROE was 17.8% in the last year compared to 22.45% three years ago. The stock is also trading with a Forward 12M P/E of 19.72.
Companies like Shopify provide the platforms that entrepreneurs leverage to build their online stores and that consumers then use to buy from them, reflect the astronomical surge of this behemoth market. Shares of Shopify have spiked by approximately 95% over the past 12 months. Shopify reported its financial results for the first quarter of 2021 on April 28. As this market continues to grow in the years ahead, shareholders could see unbelievable profits from Shopify’s similarly monumental growth story.
A classic pick for growth investors, Facebook‘s prospects as a long-term investment keep getting better and better. The company is a member of the elite group and currently captures a whopping 61% share of all social-media site visits in the U.S. Facebook’s stellar competitive advantage makes it an unstoppable stock to own in all market environments.
What started out twenty years ago as a way for surgeons to perform robotically assisted prostate removal has evolved into a platform for many different kinds of procedures. That platform consists of multiple devices, consoles for controlling them and seeing the surgical field in three dimensions, and a cart to integrate and power the various components. The average selling price of Intuitive’s da Vinci robots has remained around $1.5 million over the past decade. The company just reported first-quarter earnings, and business appears to be back on track. Year-over-year sales climbed 18% to $1.29 billion, and procedure volume rose 16%.
When Illumina went public in 2000, the cost to sequence a single human genome was over $100 million. Thanks in large part to the company’s innovation in sequencing instruments, that number has dropped precipitously. It is now closer to $1,000. That’s why Time magazine recently named Illumina among the 100 most influential companies. As with most technologies, when cost falls that dramatically, adoption skyrockets.
The company has been the big winner in that trend with 2020 revenue of $3.2 billion.
PENNY STOCK (REDDIT)
Tarena International Inc.
Tarena International is a provider of adult professional education as well as K-12 education services in China. It offers distance learning solutions and classroom-based tutoring/online learning modules. In mid-March, Tarena announced its fourth quarter and full-year 2020 financial results. In the results, the company managed to increase its net revenue by around 28% to almost $100 million. Additionally, its adult education business which makes up more than 54% of its total net revenue, increased in value by over 7% to $54 million over the same period in the previous year.
Ashford Hospitality Trust Inc.
Ashford Hospitality is a REIT or real estate investment trust focused on upscale, full-service hotels. In addition, the company’s recently created Ashford App, allows investors in the hospitality/REIT market to communicate via its free download on the App Store. Ashford will be reporting its first-quarter earnings on May 4th after market close. Safe Bulkers Inc.
This dry bulk marine transporter, announced a cash dividend of $0.50 per share on its 8% Series C Preferred shares. Additionally, it announced the same dividend amount for its Series D Preferred shares. The SB stock has been making some big moves in the past few trading sessions. The company states that it will be presenting these results via a conference call and webcast on May 5th during after hours.
LONG TERM THEMES
Okta offers cloud-native workforce identity and customer identity solutions to help clients verify the authenticity of their employees and customers and then authorize appropriate data access. The company’s share price has gained over 82% in the last year, mainly due to the explosion in demand for identity solutions driven by COVID-related lockdowns and the subsequent shift to work-from-home arrangements. Okta is currently trading at over 41 times trailing 12-month (TTM) sales.
Vertex Pharmaceuticals dominates the global cystic fibrosis (CF) market with its four drugs — Kalydeco, Orkambi, Symdeko/Symkevi, and Trikafta. Trikafta is by far the most important drug in the fight against CF — a potentially fatal genetic condition that affects the lungs and the digestive systems of around 70,000 patients globally. Approved by the U.S. Food and Drug Administration (FDA) in October 2019, Trikafta can treat almost 90% of the total CF patient population.
This stock has already made millionaires out of patient investors. The company collects and disposes of waste and has a steady, recession-proof business. The company made 21 acquisitions each in 2019 and 2020. Second, Waste Connections’ subsidiary R360 is a key waste management player in the oil and gas sector, having operations in major shale plays like the Bakken, Permian, and Eagle Ford basins.
Johnson & Johnson‘s
J&J’s clout in healthcare, diversified portfolio, focus on research and development (R&D), impressive pipeline, and dividend growth makes for the perfect wealth-building recipe for patient investors.
Remarkably, many still believe Johnson & Johnson is a consumer healthcare company, which isn’t really surprising given the worldwide popularity of its products like Band-Aid, Neutrogena, Listerine, and Nicorette. Truth is, consumer products are only a small part of the company. In 2020, pharmaceuticals made up 55% of Johnson & Johnson’s sales.
Regeneron Pharmaceuticals makes one of the two antibody treatments authorized for use today in coronavirus patients. The U.S. Food and Drug Administration granted the company Emergency Use Authorization (EUA) in November for use of its antibody cocktail in mild to moderate cases. The idea is to treat patients at risk for serious disease early so they won’t need hospitalization. The shares have increased about 4% year to date. And the stock is trading close to a low in relation to forward earnings estimates, so you can pick up the shares at a bargain today.
Pfizer is the leading player in the coronavirus vaccine space. It entered the market first. And so far, it’s fully vaccinated more than 43 million Americans compared with rival Moderna’s 36 million. Pfizer said earlier this year that it expects to generate $15 billion in sales from its coronavirus vaccine in 2021. The European Union said it will buy 1.8 billion Pfizer vaccine doses through 2023. Pfizer’s stock price hasn’t benefited from vaccine news. The stock is only up about 7% this year.
It’s one of Berkshire Hathaway’s newest additions, but Verizon is one of those names Buffett could have added to the mix long ago. Not only is it a quality name within the wireless arena, but it’s a cash-generating machine that passes along a nice chunk of its recurring quarterly profits to shareholders in the form of dividends. The company managed to produce per-share operating profits of $4.90 last year, up from 2019’s $4.81 despite the pandemic headwind. That was more than enough to fund the full-year dividend of $2.48 per share and still leave plenty behind to reinvest in its own growth.
The Bank of New York Mellon
There’s no denying the COVID-19 pandemic created a tough environment for banks. Mellon’s 2020 top line slumped by 4%, and net income tumbled to the tune of 19%. First-quarter results released earlier this month were similarly lackluster, with sales and earnings both falling year over year.Meanwhile, profit-eating expenses were the result of increased spending on software and services. These are arguably smart investments in long-term growth, even if they created short-term pain.
Ultimately, though — like Verizon and AbbVie — Bank of New York Mellon’s chief appeal to Berkshire Hathaway is its resilient business model and its subsequently resilient dividend.
WHAT YOU CAN DO
In case any of the above themes excite you, and if you haven’t done so already, its time you registered at https://pl.vested.co.in/ to start off a very simple account opening process. Once the account is up and running, you shall get the credentials by email and then simply do an online fund transfer to the US by following the instructions on the email.
Alternatively, if you wish, do please do through our videos on international investing at https://www.youtube.com/watch?v=sElKxGkQFOc&list=PLzPKW-JlmgdJbI_nhqXcRCAmU4HMZqvb9
Don’t forget to check out PL’s StrategyShop bouquet of Thematic and Basket investing at https://www.plindia.com/strategyshop/. Any client of PL can simply visit this site, select a product and get started with any of the strategies to help manage their portfolios with expert advice and research. We just added Wright Research’s Smallcap and Momentum portfolios to the list of strategies available so now you have the entire possible list of strategies available at Strategy Shop including intraday trading, positional trading, basket investing. Thematic investing, diversified asset allocations and lots more!
And in case you do not have a trading and investing account at PL, its time you got started. Visit the Account Opening page at https://instakyc.plindia.com and experience a smoothe, 15 minute account opening process to get your journey started!