Tags: RBC | stocks | US | domestic

RBC: Domestic Stocks Are the Place to Be Now

By    |   Wednesday, 07 May 2014 11:43 AM EDT

Americans might do best in stocks right now if they simply bring their investment dollars back home.

That's the conclusion from RBC Capital Markets, which found that U.S.-centric businesses are reporting far stronger results than those with major international operations during the current quarterly earnings season.

American companies in general are turning in favorable first quarter earnings, with nearly 68 percent of S&P 500 companies beating estimates, comfortably above the long-term average of 63 percent, USA Today reported.

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The industry sectors doing best are energy, with 74 percent beating forecasts followed by technology, with 73 percent exceeding forecasts, and utilities, with 72 percent ahead of forecasts.

But drilling down further, Jonathan Golub, chief U.S. market strategist at RBC Capital Markets, has found it is best to focus on domestic equities in the current market environment, according to USA Today.

"The performance gap for more domestically oriented names has widened as the season has progressed," Golub wrote in a report for RBC. "Companies with a high percentage of domestic sales are showing three times the revenue growth and six times the earnings growth than more globally oriented peers."

Golub found earnings growth at U.S.-oriented firms in the S&P 500 is 9.2 percent, versus 1.5 percent for globally focused companies.

Savita Subramanian, equity and quantitative strategist at Bank of America Merrill Lynch, said that companies beating on both revenues and earnings per share have been rewarded with higher stock prices so far in the current earnings season.

"The focus appears to be shifting back to fundamentals, as post-reporting performance spreads widened last week," Subramanian told clients, according to the Financial Post.

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InvestingAnalysis
Americans might do best in stocks right now if they simply bring their investment dollars back home.
RBC, stocks, US, domestic
290
2014-43-07
Wednesday, 07 May 2014 11:43 AM
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