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As global trade tensions play havoc with the financial markets, one strategy is to consider stocks with relatively large domestic sales exposure. This is the tactic recommended by Goldman Sachs. "Below the surface of the market, trade conflict would benefit the performance of the most domestic-facing U.S. stocks relative to the most foreign-facing firms," the firm says.
So with this in mind, I extracted five intriguing stock ideas with 95%-100% domestic sales. This means you can take a breather from trade bombshells. Just recently, President Trump announced further tariffs on $200 billion of Chinese goods, and who knows what will happen next with the E.U.?
What we do know is that these tensions could cost the global economy $430 billion, with America "especially vulnerable" to an escalating tariff war. This is according to a recent warning from International Monetary Fund (IMF).
So it makes sense to diversity your portfolio with some more domestic-focused stock picks. Plus the five stocks covered below all boast big support from TipRanks ' top analysts. This is based on their success rate and average return-per-recommendation. The result: you can follow the advice of analysts who consistently crush the market.
Let's take a closer look now at five of their top domestic stock picks:
Top Domestic Stocks:CVS Health (CVS)
Source: Mike Mozart via Flickr
Check out drugstore giant CVS Health (NYSE: CVS ). Not only is this a stock with 100% domestic sales, it also boasts 100% support from top analysts right now. These analysts are predicting 23% upside potential from the current share price. That would take shares from $68 to $84.
Most notably, the stock has just received a critical upgrade from Citigroup's Ralph Giacobbe ( Profile & Recommendations ). He is excited about the prospects of CVS' massive $69 billion acquisition of Aetna (NYSE: AET ). This is one of the U.S.' biggest health insurers. By merging, CVS gains access to a comprehensive end-to-end offering (plan design to care delivery). Plus the stock would be more defensible against rivals like Amazon (NASDAQ: AMZN ) (following its recent purchase of online pharmacy PillPack).
Luckily, sentiment is bullish that the deal will get the green light from regulators. Reorg Research has just revealed that antitrust officials at the Department of Justice don't plan to challenge the acquisition, and may send an approval memo as soon as the end of this month.
Giacobbe believes that deal integration and competitive risk from Amazon are "overstated particularly in the context of heavily discounted valuation." And looking further ahead, he is confident that the integration of Aetna will resonate with employers and individuals. As a result, the analyst ramped up his price target on CVS from $68 to $81. Meanwhile, Oppenheimer's Mohan Naidu ( Profile & Recommendations ) says the deal would "strengthen CVS's position and have significant positive long-term impact." He has an $86 price target on CVS (26% upside potential). See what other Top Analysts are saying about CVS.
Top Domestic Stocks: CSX Corp (CSX)
This "Strong Buy" stock is a leading supplier of rail-based freight transportation in North America, with approximately 21,000 miles of track. CSX Corporation (NASDAQ: CSX ) is an intriguing stock to follow right now. Following the sudden death of CEO and railroad legend Hunter Harrison, new CEO James Foote is targeting 20% efficiency gains and cutbacks in numerous areas. These new initiatives have prompted a wave of bullish analyst movements.
Top RBC Capital analyst Walter Spracklin ( Profile & Recommendations ) is feeling very encouraged by the company's new strategy. He has just reiterated his CSX Buy rating with a $71 price target (11% upside potential). "Our positive thesis on CSX is predicated on the meaningful changes made to CSX's operations as it implemented a precision railroading model … [and] the benefits of precision railroading are occurring faster and more significant than expected. Accordingly, we continue to recommend the shares at these levels."
Spracklin notes that CSX has just put six rail segments up for bid, potentially generating a nice cash flow bump and efficiency gains. He writes: "CSX is continuing aggressive cost cut reductions and we see the potential sale of these rail segments as another step toward the company's 60% O/R target by 2020." These segments represent 3% of the total miles owned by CSX. See what other Top Analysts are saying about CSX.
Top Domestic Stocks: Dollar General (DG)
Source: Mike Mozart via Flickr
In the face of growing e-commerce pressure, it takes a lot for a retail stock to succeed. Luckily Dollar General (NYSE: DG ) stands out from the crowd. Its key selling point is that it remains one of the cheapest stores around. It also boasts over 14,300 stores.
Three recent analyst actions speak volumes about the stock's upward trajectory:
First, we can see that for five-star Oppenheimer analyst Rupesh Parikh ( Profile & Recommendations ) DG remains his "top food retailing/ discounter pick." He notes that management is targeting at least 10% EPS growth longer-term, which - if achieved - represents "standout growth potential".
Similarly, Citi's Greg Badishkanian ( Profile & Recommendations ) has just initiated coverage on DG with a bullish "Buy" rating. He cites solid execution and improving leading market share. Like Parikh, he tells investors that Dollar General is one of the best positioned stocks within the discount/dollar store space.
And third, Raymond James analyst Dan Wewer ( Profile & Recommendations ) has just upgraded Dollar General to Strong Buy from Outperform and raised his price target to $115 from $100. This indicates 16% upside potential from current levels. He is impressed by the company's expanding market share, inventory shrinkage and increasing manager tenure. Add to the picture rising dividend payments and share buybacks, and you can see why DG is a top stock pick for savvy investors right now. See what other Top Analysts are saying about DG.
Top Domestic Stocks: Intuit (INTU)
Source: Mike Mozart via Wikimedia (Modified)
California-based Intuit (NASDAQ: INTU ) develops and sells accounting and tax preparation software to small businesses and individuals. From a trade war standpoint, note that 95% of INTU's sales are U.S.-based. According to the Street, Intuit is facing a vast opportunity in small business with increasing ability to penetrate ~90% of the Consumer Tax market Intuit doesn't already own.
Indeed, the stock has just received a telling upgrade from five-star Stifel Nicolaus analyst Brad Reback ( Profile & Recommendations ). This analyst comes to the bull camp after three years on the sidelines. He complimented the rating shift with a price target ramp-up from $197 to $240 (12% upside potential).
So what prompted Reback to make the change now? He sees multiple growth opportunities ahead: "At a high level, we believe Intuit's two primary business divisions, Consumer Tax and QuickBooks Online, each have improving competitive dynamics and multiple secular growth levers and improving competitive environments." He believes that this "should continue to strengthen the value proposition of Intuit's One Ecosystem platform approach."
For example, the company has just launched TurboTax Live. Not only should it help cut the platform's churn of 3 million filers every year by simplifying user's financial position, it also represents a neat way for Intuit to market and monetize third-party products. As a result, Reback is modelling for double-digit top-line Consumer Tax growth. See what other Top Analysts are saying about INTU.
Top Domestic Stocks: Verizon (VZ)
Telecom giant Verizon (NYSE: VZ ) is a "Top Pick" for Credit Suisse analyst Douglas Mitchelson ( Profile & Recommendations ) in the wireless space. He has just carried out a deep-dive into the winners and losers of the converging telecom landscape. This is in the face of AT&T's blockbuster deal for Time Warner. And Verizon comes out shining. This is the "best play on stabilization in wireless competitive environment" writes Mitchelson.
He elaborates that Verizon represents an almost pure-play wireless company with industry-leading scale and return-on-investment. Plus expenditure remains stable as 5G has turned out cheaper than expected. VZ's "returns should start to improve again via its major $10b cost savings plan, stable capex spending, record low churn, the benefit of tax reform and abstinence from dilutive M&A" cheers Mitchelson. He has a $58 price target on Verizon, indicating 12% upside potential.
And the picture wouldn't be complete without noting that Goldman Sachs' Brett Feldman ( Profile & Recommendations ) has also just upgraded Verizon from Hold to Buy. "The pipes are not broken," comments Feldman. Verizon is "positioned as [one of the ] long-term leaders in broadband and 5G. Put another way, we believe that Verizon can drive attractive long-term shareholder returns by sustaining its core focus on connectivity (i.e. building strong pipes)." Verizon has 100% domestic sales. See what other Top Analysts are saying about VZ.
TipRanks.com offers exclusive insights for investors by focusing on the moves of experts: Analysts, Insiders, Bloggers, Hedge Fund Managers and more. See what the experts are saying about your stocks now at TipRanks.com . As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.
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