With the economic sanctions by the U.S. and its allies crimping the Russian economy, you may want to avoid stocks with an exposure to Russia. Or you may want to do it simply for moral reasons, given the country's war on Ukraine.
But you may not have to do anything: U.S. companies don’t do a lot of business with Russia.
“S&P 500 companies' direct exposure to Russia is de minimis, representing just about 0.1% of total sales,” Bank of America analysts write in a commentary.
“There are only 10 companies that disclose sales exposure to Russia, all of which have less than 10% sales exposure to the country.
"We see limited direct impact from Russia's invasion of Ukraine and sanctions on Russia, but bigger indirect impact from oil and Europe.”
The 10 companies include:
· Philip Morris (PM), the tobacco giant. Russia sales exposure: 8%.
· Mondelez (MDLZ), the big food company. 5%.
· PepsiCo (PEP), the food and beverage titan. 5%.
· Mohawk Industries (MHK), a flooring products manufacturer. 4%.
· Howmet Aerospace (HWM), an aerospace parts maker. 4%.
· Colgate-Palmolive (CL), the consumer products maker. 3%.
· Procter & Gamble (PG), the consumer products stalwart. 2%.
· Brown-Forman (BF.B), the alcoholic beverage company. 2%
· Coca-Cola (KO), the iconic beverage company. 2%.
· Estee Lauder (EL), the beauty products company. 1%.
Morningstar’s Take on Philip Morris...
Morningstar analyst Philip Gorham assigns the company a wide moat and puts fair value for the stock at $103. It recently traded at $104.68.
“Philip Morris and Swedish Match (SWMAY) have confirmed talks are ongoing between them regarding a potential acquisition of Swedish Match by Philip Morris,” he wrote in a May commentary.
“We suspect there is little wiggle room for a deal to create value at a price above Swedish Match's market cap of 123 billion Swedish kronor at the close of business on May 9.
"However, we do think there could be strategic and financial benefits from the access to the U.S. market that Philip Morris would gain.”
...and on Mondelez
Morningstar analyst Erin Lash gives the company a wide moat and puts fair value for the stock at $63. It recently traded at $62.95.
“It has been nearly three years since CEO Dirk Van de Put disseminated a revamped recipe to incite profitable growth at Mondelez, centered on extending its distribution, fueling investments behind local and global brands, empowering local leaders, and increasing innovation agility,” she wrote in a May commentary.
“By all accounts, this has been a tasty endeavor, with 4% organic sales growth on average since fiscal 2018 and [1.1 percentage] points of adjusted operating margins expansion to nearly 17% in fiscal 2021.”
The author of this story owns shares of PepsiCo, Procter & Gamble and Coca-Cola.
