| NEW YORK
NEW YORK May 9 U.S. stock investors are finding
the value of staying close to home.
Even as the U.S. economy barely grew in early 2014,
companies with a domestic orientation have on balance delivered
better first-quarter sales and profit growth than their globally
RBC Capital Markets found that sales growth among companies
with a high percentage of their revenue coming from the United
States was three times stronger than those with a bigger
international sales mix. Earnings growth was six times as
robust. U.S.-focused names had bigger upside surprises on both
the top and the bottom lines.
"With the U.S. economy vaulting energetically out of its
winter cold spell but China looking even more beset by
gravitational forces ... the two-speed developed
market-vs-emerging market global recovery ... is growing more
clear and present," analysts at Nomura wrote in a note to
Companies with U.S.-oriented revenue rank among the year's
leading advancers in the S&P 100 Index.
Anadarko Petroleum Corp, which gets more than
three-fourths of its revenue from the U.S. market, is up nearly
27 percent in 2014. In its latest quarter, the company's revenue
grew 50.1 percent, representing an upside surprise of almost 50
percent compared with expectations.
Utilities are 2014's runaway outperformers, with the S&P
utilities index up nearly 11 percent. Utilities also
have some of the highest U.S. revenue exposure. The stock of
Exelon Corp is up 32.2 percent in 2014; in its latest
quarter, Exelon posted revenue growth of 17 percent, good for an
upside surprise of 28 percent relative to analysts' forecasts.
Power sector-focused funds have attracted inflows of almost
$2 billion in 2014, according to Thomson Reuters' Lipper, though
the sector is also favored as a defensive or dividend play,
offering an average yield of 3.7 percent.
Conversely, technology companies have the highest percentage
of foreign revenue exposure, according to Standard & Poor's. The
group, which has sold off recently on concerns that valuations
are stretched, has had outflows of $1.25 billion this quarter,
according to Lipper.
Qualcomm Inc and Broadcom Corp have more
than 94 percent of sales coming from abroad and both
disappointed in their most recent results, with Chinese growth a
The week ahead will feature earnings from several companies
representing both the domestic-leaning and international camps.
Applied Materials, which gets about 80 percent of
its revenue from abroad, will report results next week. Analysts
expect the company to post revenue growth of 19 percent.
Deere & Co, which gets 63 percent of its sales
domestically, is set to report earnings on Wednesday, while
Wal-Mart Stores Inc, the largest of a slew of retailers
reporting next week, is due to post results on Thursday.
Wal-Mart gets 71 percent of its revenue from the United States.
Wall St Week Ahead runs every Friday. Questions or comments
on this column can be emailed to:
(Editing by Dan Burns and Jan Paschal; For the U.S. stock
market report, click )