Business IS Booming: Pay Attention to These Companies' Stocks

Posted by - Thursday, October 27th, 2011

Good News!

We keep finding glimpses of positivity amidst all the gloomy news in the media lately. Some of the latest research suggests that the America is well on its way to reclaiming its responsibilities as the “global growth engine.”

In the past few years, China has dominated this field because of its rising middle class willing to perform labor work for cheap rates. In that time, China has taken Japan's role as the second-largest economy. Now, China is no longer the #1 go-to center for manufacturing parts and labor since costs have risen.

Take a look at these booming businesses with a large portion of the labor force and investments settling here in the United States:

  • Ford - Ford has agreed to invest $6.2 billion in American plants. Just yesterday, Chrysler workers approved a four-year aggrement on a pact that will add 2,1000 jobs in the U.S. However, workers will receive smaller bonuses than workers at Ford. Next month, Ford workers will get their full $6,000 signing bonuses, followed by profit-sharing checks of about $3,750

  • DuPont - This chemical company employs over 60,000 people around the world. At the beginning of this year about 8,000 of those employees were over in China. By this year's third quarter, business overseas had come to a standstill, but picked up steadily here in the U.S.

  • Caterpillar - After the economic slowdown in 2008, Caterpillar lost about 17,900 employees. By the final day of 2009, they employed a total of 93,813 people: 43,251 in America and the remaining 50,562 outside of the country. This year, Caterpillar predicts the Chinese economy will "wane" while the U.S. economy will pick up the pace. Expectng conditions to improve, the company plans to focus more on American labor and investment. 

  • Boeing - In September, Boeing contributed a $130 million investment to create a "world-leading aircraft manufacturing facility to support continuing U.S. and international demand for the unmatched vertical lift capabilities of the Chinook," said Jean Chamberlain, vice president and general manager of Boeing's Ridley Township-based Mobility division.

  • General Electric - GE is currently in the process of altering their 10-year outlook and transforming their own investment portfolio. This year, Fortune listed GE is the 6th largest firm in the entire United States. On October 18, GE announced that it will invest a total of $231 million in manufacturing improvements here in the U.S. in order to meet an exponentially growing demand.

  • Master Lock - Early this year, Master Lock Co. began restructuring their restructuring processes under shareholder pressure. By
    early summer, Bob Rice, a senior president with the company, announced that it was much cheaper to manufacture combination locks in Milwakee than it was in China. Consequently, the factory in Milwaukee had been able to add 78 employees in less than two years' time, allowing the workforce to grow to 440. Increased fuel prices to transport goods in addition to the rising costs of wages in Asia has helped the workload shift in favor for America.

  • Volkswagen - Late this spring, Volkswagen AG committed a $1 billion investment towards a new plant in Chattanooga, Tennessee in order to boosts sales and jobs after the auto industry fell to an almost three-decade low on decreased consumer demand. The factory opened on May 24, 2011 just after news was released that automakers (overall) had announced over $17 billion in factory investments between the U.S. and Cananda alone from 2010 thorugh May 2011.

  • Samsung - In June, news reports applauded Samsung for investing $3.6 billion in one of its semiconductor fabrication plants in Austin, Texas. With the expanded factory, the company will be able to hire another 500 employees -- from 1,000 workers to 1,500 at this particular facility. The expected-date-of-completion for the new facility will likely be this coming December. With the additonal investment money included, Samsung has contributed over $9 billion to Austin's economy. Since 1996, Samsung has paid nearly $120 million in local and state taxes.

  • UPS - The United Postal Service has hired approximately 358,400 employees in the United States, providing numerous locations, job positions, and great benefits. In fact, it is the second-largest civilian employer in the nation (Wal-Mart is #1). And, just like DuPont, UPS too anticipates a slowdown in China's economy and a slow, steady increase here in the U.S. so they are investing accordingly. There's good news for Europe too: UPS just recently invested $200 million to expand its European air hub which will add 200 employees to a hub currently employing 2,300 employees.

For DuPont and Caterpillar, the greatest source of sales comes from North American segments. As many Americans still expect a decline in growth here in the U.S., many investors could be undervaluing their stocks.

However, with a sales shift emerging, it may be worth considering buying their shares. Price-to-earnings ratios for those companies are 2 to 4 percentage points lower than where they were at the end of 2007, which marked the start of a recession. 

More Good News.

Today, the number of orders requested for durable goods from the United States – mostly machinery equipment – increased by the most it has in six months. Other durable goods, excluding transportation equipment, spiked up by FOUR TIMES more quickly than analysts predicted; up to 1.7%. This further confirms recent reports that the manufacturing industry is building itself back up.

Additionally, Bloomberg recently polled a group of economists that estimated our GDP growth for 2012 to be 2.0%, up from 1.7% in 2011.

So can we really begin to hope for a change of pace for American businesses and welcome 2012 with open arms? Yes, yes we can...

*Indented excerpts from TheStreet.

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