Supply-chain disruption has been a major problem for the economy almost since the covid pandemic erupted in March 2020.
Some investors may want to be cautious about investing in companies that are vulnerable to problems with the global supply chain.
Bank of America has created a list of S&P 500 companies that had zero mentions of “supply chain” in their latest earnings calls, as of April 28, and that have less than 5% of their sales overseas. Bank of America rates all the stocks buy.
Here are 10 companies that appear on the list, all with zero sales overseas.
· Wells Fargo (WFC), the bank;
· Charles Schwab (SCHW), the financial services firm;
· American Electric Power (AEP), a utility;
· Williams Cos. (WMB), a natural gas transport company;
· Essex Property Trust (ESS), an apartment real estate investment trust;
· Kroger (KR), the country’s largest grocery chain;
· CVS Health (CVS), the pharmacy chain;
· UnitedHealth Group (UNH), the health insurance giant;
· Progressive (PGR), the insurance company;
· Fox Corp. (FOXA), the media company.
Morningstar’s Take on Wells Fargo
Morningstar analyst Eric Compton assigns the company a wide moat and puts fair value for the stock at $58, 45% above its recently trade at $40.
“Wells Fargo remains in the middle of a multiyear rebuild,” he wrote in a commentary. “The bank is still under an asset cap imposed by the Federal Reserve, and we don't see this restriction coming off in 2022.”
Further, “Wells Fargo has years of expense savings-related projects ahead of it as the bank attempts to get its efficiency ratio back under 60%,” Compton said.
Morningstar’s Take on American Electric Power
Morningstar analyst Andrew Bischof gives the utility company a narrow moat and puts fair value for the stock at $91. It recently traded at $95.
“Nearly all of the company’s $38 billion capital investment plan for 2022-26 focuses on regulated investments, supporting 7% annual rate-base growth and earnings growth at the midpoint of management's 6%-7% target,” he wrote in a commentary.
“AEP has a busy regulatory calendar, working on achieving constructive rate cases, which should help returns at its utilities.”
Morningstar’s Take on Fox
Morningstar analyst Neil Macker assigns the company a narrow moat and puts fair value for the stock at $43, 28% above its recent trade at $33.50.
“The firm represents a large bet on the viability of live sports and news, as we project that the cable networks, including Fox News and FS1, will generate the vast majority of operating income for Fox Corp.,” he wrote in a commentary.
“We believe these bets are well placed, given our expectations for the evolution of the television industry, but Fox is now undiversified relative to other media firms.”
The author of this story owns shares of United Healthcare.
