OK, so we all know now that Britain voted to leave the European Union. All the polls told you not to worry about that happening, but then it happened. The dollar surged, stocks in Britain and Europe fell hard enough to drag down the U.S. market, and that all adds up to Janet Yellen and the Federal Reserve now likely being unable to raise interest rates like they wanted to. Still, the week of July 1 ended up not being so bad when you consider the recovery that was seen after the first two post-Brexit trading days.
Even by Thursday, the final trading day of the second quarter, the Dow Jones Industrial Average had recovered about 80% of its 900 point drop seen from the two days after the Brexit news broke. Maybe this doesn’t seem normal. Maybe trade deals do not create massive rallies going in, but maybe they create woes and uncertainty on the way out. Perhaps you have heard the saying that there is always a bull market somewhere.
24/7 Wall St. wanted to break out 13 great companies which are very close to being All-American. These are all multi-billion dollar companies which are either industry leaders or which are massive. They should have very little direct cares about what is happening in Britain and Europe other than relative values based upon peer action. The focus is less on current share prices, and investors need to understand that at least some of these have a premium valuation now because they are less exposed to the current woes or because they are defensive by nature.
AT&T Inc. (NYSE: T) isn’t just in wireless and telecom now. It also owns DirecTV and has a focus in the United States and now in Latin America. Earnings were solid and its entertainment and subscription base keeps growing. Merrill Lynch has a Buy rating and recently raised its price objective to $46.00 from $42.00. Investors are paid a solid 4.6% dividend yield and AT&T’s consensus analyst target is $39.67. It is above the consensus target, but it has the highest yield in major telecom carriers and is now deemed to be defensive.
Altria Group Inc. (NYSE: MO) keeps hitting new highs as it is now U.S.-focused for tobacco and related products. Its international segment was spun out long ago, and nobody seems to care that it is killing off its customers (or are they subscribers?). The real issue is that Americans may quit smoking eventually, but it will not have anything to do with Brexit. Altria’s price target was recently raised to $71 from $65 at Stifel. This was at $66.31 ahead of Brexit and was at $68.50 late in the week after Brexit. Its dividend yield is now under 3.4% and its consensus analyst target price is $68.00.
American Electric Power Co. Inc. (NYSE: AEP) is one of the largest electric utilities in the United States. it has more than 5.3 million customers in 11 states and is a key defensive stock that has risen as yield hungry investors have pushed up utility prices. AEP shareholders are paid a solid 3.3% dividend yield. Merrill Lynch’s price objective is $68.00, and the consensus is at $68.18. Shares were last seen trading above $69.00 and the emphasis here is that rates will be lower for longer.
American Water Works Co. Inc. (NYSE: AWK) is America’s largest public and independent water utilities operator. It has some Canada exposure, but it covers millions of Americans and keeps making small bolt-on acquisitions of water systems. Can anyone think that Brexit fears will eliminate or lower America’s daily water use? Shares hit yet another all-time high above $83.00. American Water Works has a low yield of 1.7%, but that is because the stock has surged and investors are paying a major premium to own water. This stock price is now over $10.00 higher than the consensus analyst price target, and analysts keep warning that valuations are unjustified — yet the stock has kept surging higher.
CBS Corp, (NYSE: CBS) was named as one of three value stock picks recently by Jefferies. The media giant is more U.S. focused than anything. Its news, sports and entertainment franchises should insulate the threat of Brexit for Americans. After all, how many Americans will watch less TV just because of Brexit? Wall Street expects CBS to shrink its share float by close to 25% over the next two years. Despite a decline in cable subscribers, Jefferies thinks that CBS will win as retransmission rates should climb and offset the subscriber declines. CBS shareholders are paid a 1.11% dividend yield, and Jefferies has a $62.00 price target. That is versus a consensus analyst price target of $63.00 and versus a recent $53.50 share price.